The Coming Bear Market in Stocks

In general, a bear market is a market that has declined twenty percent from its high. This drop becomes especially significant when multiple stock indexes are down twenty percent or more and when these declines have lasted for at least several weeks.

Are U.S. stocks currently in a bear market?

No.

Are global equity markets in bear market statuses?

Yes.

Could U.S. stocks be headed for a bear market?

Absolutely.

While no one can see the future, the domestic stock market could potentially be at or near the highs for this year and the foreseeable future. In fact, stocks could possibly be setting up for a move lower that will make 2008 and 2009 look like a walk in the park.

Consider these points for a moment:

  • U.S. equities have been moving higher for years now with very few substantial pullbacks. While anything is possible, markets don’t typically go straight up or straight down.
  • Some would argue that artificially low interest rates and several rounds of QE have driven the rally in stocks. If you haven’t been reading the news, QE came to an end in the U.S. and the Fed hiked interest rates in December for the first time in nearly a decade.
  • The world’s second largest economy – China – is seeing a massive slowdown that has caused its equity market to see severe selling and volatility. Other emerging markets have also had troubles.
  • The threat of global deflation is genuine. Just ask the ECB or Bank of Japan. A lack of inflation and declining prices could spread further sending the global economy into a tailspin and stocks along with it.
  • The U.S. could potentially slip back into recession. Enough said.
  • Some estimates overvalue stocks to the tune of seventy-five to one-hundred percent.

While this list could go on and on, we think you get the point…

Imagine for a moment a fifty percent drop in the stock market. Now a seventy-five percent decline.

Not a pretty picture, is it?

This is all leading up to a choice you must make:

Continue buying stocks at what could be the highs or very near, or begin to take some chips off the table and look for alternatives.

If you don’t allow greed to take control of your decision, and you remain objective, we think you will agree that now might be a good time to do some “rearranging.”

What asset class has the potential to outperform during a raging bear market while potentially preserving your wealth and purchasing power?

The answer is gold.

Gold often exhibits a negative correlation to stocks and may be bought during times of economic or geopolitical unrest. We believe that the upcoming bear market will be severe and lengthy, and that many investors will wait until it’s too late to diversify.

Don’t let this happen to you.

Gold has been considered a reliable store of wealth and value for thousands of years through all types of market conditions. This essential precious metal may potentially be useful in portfolio diversification and can potentially skyrocket in price if investors seek its perceived refuge.

Be objective, look at the writing on the wall. If you don’t have an allocation in physical gold already, now may be the perfect time to begin building a gold portfolio. If you do own gold, now may be the perfect time to acquire more.

With stocks potentially set to tumble and with gold possibly gearing up for a significant rally, why wait?

Explore your options today. An Advantage Gold account executive can guide you through the process of acquiring and holding physical gold bullion and can even show you how to buy this precious metal using your IRA account. Don’t wait for stocks to tumble. Call us today at 1-800-341-8584.

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