Global markets could potentially see significant volatility soon, and U.S. stocks could see the multi-year bull market come to an end any day now.
Are you prepared?
Investors will likely have to grapple with several key issues in the coming months and years, and now may be a good time to reflect and ready yourself for what could lie ahead. Here are three key questions you should be asking yourself right now, and if you don’t have the right answers, it may be time to take action:
1. Am I still heavily long equities and risk assets?
If so, it may be time to consider reallocating or considering some alternative asset classes. Stocks are not likely to trend upwards forever, and could be precariously close to turning south. One could argue that some stock markets are in bubble territory, and we all know what eventually happens to bubbles.
All the QE and zero interest rate policies can only drive stocks and risk appetite so far. Some might argue that the U.S. and other markets have been artificially propped up by extremely accommodative monetary policies. In the U.S. those policies have now come to an end. The Federal Reserve raised its key interest rate in late 2015 for the first time in nearly a decade. Can stocks keep moving higher with no QE and the notion of rising rates?
2. Do I have assets that may potentially hedge against a dollar decline?
The U.S. Dollar index has been in a firm downtrend and could be close to breaking major support. A breakdown of this support could potentially send the dollar sharply lower. The dollar is not only being affected by interest rate dynamics, but is also likely seeing some pressure as its status as the world’s reserve currency of choice comes into question. Several countries have already begun a move away from the dollar, establishing swap lines outside of dollars to facilitate trade. While oil is still transacted in dollars, a large scale move away from the petrodollar could potentially send massive quantities of dollars back home, flooding the market and destroying its value in the process.
What if you had to pay $10 for a gallon of gas or $5 for a loaf of bread? What if you could no longer afford prescription medications or imported clothing or vehicles?
3. What assets do I have that might offer some protection from inflation/deflation?
The notion of deflationary forces taking hold has been widely covered in financial media in recent months. Don’t think deflation is a genuine risk? Just look at Japan and the European Union. Japan has been battling deflation for nearly two decades and has not been able to get its economy on track. The EU, despite massive amounts of QE by the ECB, has also struggled and has not been able to spur solid growth. Both of these nations have now also employed negative interest rates in what some might consider a desperate effort to spur economic activity.
It’s no secret that China is slowing down, and the effects of the world’s second largest economy are far-reaching and significant. Could slowing economic activity and falling prices spread further? Could the U.S. eventually be forced to go back to the printing presses and begin stimulus efforts once again?
On the other hand, what if all of the money printing that has taken place over the years finally catches up and ignites rampant hyperinflation? What then?
Fortunately, there are asset classes that may potentially offer some protection from these and other scenarios. Hard assets like gold, silver, and other precious metals may be a wise addition to your portfolio if you don’t own them already. If you do, now may be a good time to add more.
What makes these assets so special?
Precious metals like gold and silver have been considered a reliable store of value and protector of wealth for thousands of years. They are recognized and valued all over the globe, and cannot go bankrupt or default. They carry zero counterparty risk.
These assets may potentially rise in value during periods of inflation or deflation, and may also see appreciation in the face of declining fiat currency values. Because these are natural resources of limited supply, they may also potentially experience significant price appreciation.
Now may be the ideal time to consider an allocation in physical gold or silver, and adding these precious metals to your portfolio has never been easier than it is today. An Advantage Gold account executive can show you how to build a significant holding of these precious metals and even how to use your existing IRA account to begin accumulating physical gold and silver. Don’t wait for the next bubble to burst or for your purchasing power to decline further. If you don’t have good answers for the questions above, now is the time to take action. Start taking steps to protect your financial future now. Call us today at 1-800-341-8584 to explore your options.Tags: advantage gold, alternative asset classes, buy gold, buy silver, death of petrodollar, dollar demise, petrodollar trouble, physical gold, precious metals, protect you assets