The gold market has gotten 2016 off to a good start. Investors have been buying the yellow metal as uncertainty over global economies and equities intensified. The interest seen in gold at the beginning of the year could potentially be just a glimpse of things to come. Gold appears to have found a meaningful bottom, and the market may be poised to resume its longer-term uptrend.
While the possible reasons for a rally in gold are numerous, here are three potential issues that could potentially drive gold significantly higher from recent levels:
- Interest rate expectations could change dramatically: While the second half of last year was dominated by talk of “if” and “when” the Fed would hike interest rates, the central bank took action in December raising the key interest rate for the first time in nearly a decade. Many expected the central bank to continue on this path at its March meeting; however, the central bank elected to hold off. The bottom line is this: Global economic conditions remain precarious and the Fed is not likely to aggressively hike rates anytime soon and risk upsetting the current recovery. Rates, even if moving up, could quite possibly stay extremely low for the foreseeable future.
- The stock market could undergo another crash: While stocks saw some volatility last summer and at the beginning of this year, the market has come roaring back each time. While no one can see the future, we believe that stocks will get hit at some point and will not come roaring back, but rather continue lower. There are many reasons for a potential large-scale sell-off in equities, and the current state of market optimism could potentially be seen as a contrarian indicator. The notion of higher rates, more trouble in China, geopolitical issues and more could all potentially pave the way for lower equities. If stocks do in fact enter a bear market, gold could potentially stand to benefit as investors seek out alternatives.
- The uncertainty surrounding the Presidential election: It’s no secret that the current Presidential election could have a dramatic impact on the U.S. economy and foreign policy. Fear of the unknown could potentially drive investors to seek out the perceived safety of gold and other precious metals. Additionally, based on differences in economic thought and potential policy, stocks could either A: do nothing. B: rally or C: tank, depending on the election’s outcome. While higher stocks can potentially weigh on gold, lower stocks could potentially fuel buying in gold. See #2.
While this list could go on and on, these three issues represent some of the biggest potential influences for the gold market this year.
As an investor, you can choose to:
A: Keep doing what you are already doing
B: Take action
C: Stick your head in the sand and hope for the best
If you believe that gold could potentially move sharply higher as we do, then now is the time to act. Adding an allocation in gold and other precious metals can potentially offer further portfolio diversification as well as peace of mind.
Adding this key precious metal to your holdings has never been easier than it is today. In fact, you can even use your existing IRA account to begin acquiring and holding physical gold bullion. Don’t wait for a stock market crash or more economic troubles to take action. Speak with an Advantage Gold account executive today. Our professionals will answer any questions you may have about buying gold in your IRA and can guide you through the process from start to finish. Call us today at 1-800-341-8584.Tags: add gold to my ira, advantage gold, allocation in precious metals, bear market, gold, how to buy precious metals, interest rate, invest in gold, portfolio diversification, precious metals, presidential election, stock market crash