General Motors, The Stock Market, and Gold
If the saying “As goes General Motors so goes America” holds true, then it doesn’t look good for America. Our own look at GM,
as its credit rating dropped to just above junk status and its share price to under $30, suggests that GM’s problems may be indicative of broader problems with many so-called blue chip companies. Their codependent pension plans may eventually bring these giants to their knees, as an aging work force means more retirees on corporate pension plans per currently-employed worker, much like the troubles Social Security faces. Investors are warned to be careful of these once-mighty blue chips and to question traditional buy-and-hold investment strategies. The Dow:gold ratio is presented as an indicator for asset class changes from traditional blue chips like GM to precious metals.