Much has been said about the elevated levels of the US stock markets in recent months. Stocks have glided effortlessly to new all time highs even as economic troubles persist and the global economy shows signs of weakness. The Fed’s loose monetary policy combined with other central bank stimulus measures have clearly been the key drivers of lofty equity prices. This makes perfect sense. After all, the Fed has held interest rates at zero for 6 plus years while pumping billions of dollars into the economy through its bond buying program. The reality is that, in the absence of any interest to be earned, investors have little choice but to buy stocks in the hopes of keeping up with inflation.
This has led investors young and old to be “long” the equities market for some time. Retirees, who may rely on interest income, have had to take more risk in order to earn any possible return on their money as they search for yield that is necessary to maintain their style of living in retirement.
The lack of options has driven stocks higher, and one could argue that stocks have now reached “bubble” territory…
We all know what eventually happens to bubbles…
And speaking of bubbles, the bond market, having gone through a 35 year bull run could also pose significant risks going forward. Recent volatility in global bond markets has been widely covered in the financial media. The reasons for this volatility, however, are what is most important.
Bond investors appear to be getting nervous as the Fed gets ready to raise rates and as inflation expectations begin to increase.
Inflation has thus far been virtually non-existent, and this could be why the Fed and other central banks will be forced to continue with quantitative easing, low interest rates, or other forms of stimulus.
But…The longer the era of easy money continues, the more of a risk rampant inflation becomes…
The global financial system is awash in money, and the pumping continues! This large supply of money will further erode the value of each unit of currency. It’s simply inevitable. As each unit of currency loses purchasing power, everyday goods and services become more expensive and the inflation cycle begins or accelerates.
As stocks hover around all time highs and more uncertainty creeps into the bond market, gold and other precious metals may see additional buying interest.
In order to preserve its credibility, the Fed will likely raise rates this year. As rates go up, stocks and bonds will become less attractive and investors will be looking for alternatives.
Given current equity levels and recent lofty bond prices, the gold market should be considered “cheap” right now and could present an excellent buying opportunity for the long-term investor.
In a recent Fox Business interview, the case for why investors may turn to gold was laid out. When discussing why gold may be relatively cheap right now, Advantage Gold CEO Larry Levin stated “I agree it’s a bargain.”
Would you rather be buying an asset that has run up to new all time highs on artificial stimulus or an asset that has pulled back and is now on sale?
Unlike the stock market, gold is not driven by QE or central banks. Gold is gold. It derives its value from its scarcity, history and reputation.
It cannot “pop,” default, or go bankrupt…
We believe that gold presents an excellent buying opportunity right now…
Gold is well off its 2011 highs, a level we expect to be eclipsed in time, and can be effectively purchased right now at a steep discount.
Or-you can keep chasing returns in the equity bubble until the bubble bursts. The choice is yours…
Astute investors are already positioning themselves in gold, silver and other precious metals. They see the writing on the wall and know what is in store for stock investors. Shouldn’t you?
If you are interested in adding wealth protecting assets to your portfolio-assets that may protect you from the coming equity bubble and dollar collapse-then consider gold and precious metals while they are on sale.
One of the simplest ways to gain exposure to these critical precious metals is through a precious metals IRA. Getting started with a gold IRA is easy. Our experienced executives are here to guide you, step by step, through the entire process. Call us today at 1-800-341-8584 FREE
Tags: current gold levels, gold price, stock bubble