Chart 1: S&P 500, DAX, HSI, GOLD compared for the month of August 2011

August was a hectic month. Stock markets moved up and down like a yo-yo.

Gold went as a rocket to crash again… or that was what was said on the news.

Here are two charts that provide you with some perspective of what happened during August.

Chart 1 (above) compares for the month of August the S&P 500, the German DAX Index and the Hong Kong Hang Seng Index (HSI) with the Gold price.

Note that:

• Gold (green line) may have fallen a little from its peak, it still has been a very rewarding investment during August.
  
  
  
• The S&P 500 (yellow line) is doing best of the three stock market indices.
  
  
  
• The DAX (blue line), which was the highflyer before August showed the biggest drop.

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Below, Chart 2 compares the same indices since the beginning of 2011 (year to date).

Note here that:

• Gold had a dip in January, recovered in February, stayed in sync with the stock market indices from March till June and started its spurt already in July.
  
  
  
• The Hong Kong HSI started its deviation from the S&P 500 and declining trend already in April. Could the Hong Kong market be used as an advanced warning signals for what is to come in the US and Europe.
  
  
  
• The S&P 500 and the DAX acted as a great tandem till the beginning of August. Something happened now that caused the deviation.

Chart 2: S&P 500, DAX, HSI, GOLD compared for 2011 year-to-date

Since the beginning of the year, the US Dollar has depreciated about 6% compared to the Euro. However, that changed happened in the beginning of the year and not recently. Thus it does not explain the difference in August between DAX and S&P 500.

Maybe the fall of the DAX in August is the result of an understanding that Germany does not escape the malaise in Europe and it catches up (or rather down) with the other European markets that have been falling more in previous months.

Germany was maybe seen as the safe haven of Europe (resulting in a better performing stock market) and maybe the DAX has now adjusted to some lack-luster economic prospects for Europe?

What do you think happened in April for the HSI, in June for Gold and in August for the DAX?

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