It seems that the pace and timing of additional interest rate hikes by the Federal Reserve has largely dominated financial headlines in recent months.
While the general consensus seems to be that the pace of further hikes will be very slow and incremental, we’d like to present an alternative possibility that seemingly few investors are considering.
What if inflation expectations were to pick up rapidly? What if in the coming quarters, inflation were to accelerate at a pace significantly faster than the Fed’s two percent target?
The recent commodity market carnage has certainly been widely discussed in financial media. Oil declining to $30 per barrel, copper falling under $2 and natural gas trading below levels last seen in 2012…
Commodities, however, have shown signs of bottoming in recent months. If commodities have in fact turned the corner, rapidly rising commodity prices could potentially drive a steep increase in CPI.
A sharp rise in CPI could potentially motivate the Fed to raise interest rates at a much faster pace than currently anticipated.
While such a scenario may be quickly dismissed by some analysts, the underlying danger is clear: With rapidly rising inflationary pressures, a loss of purchasing power may result.
An accelerated pace of rising interest rates could potentially catch markets – and investors – off guard.
Such a scenario could result in a domino effect of a bond market sell-off leading to rising yields and a corresponding equity market sell-off as yields rise.
Potentially overvalued assets will be clobbered while potentially undervalued assets may rise. Lower stocks and higher gold perhaps?
Such a scenario could potentially unfold as economic activity remains relatively weak while inflationary pressures accelerate. As equities are sold off, investors may become increasingly anxious and economic activity could potentially slow even further. In other words, an extended period of STAGFLATION could be in the cards.
Time will tell if such a scenario will play out, but the time to determine if your portfolio is prepared is before such a scenario, not after.
Now is the time to take a good, hard look at your holdings and how you are positioned for the coming months and years.
Do you have asset classes within your portfolio that may potentially hedge against inflation and a loss of purchasing power?
Assuming the answer to that question is “no,” you may want to consider an allocation in such asset classes now before prices potentially rise.
You may want to consider accumulating physical, hard assets like gold and silver.
Gold has been considered a reliable store of value and protector of wealth for thousands of years. Physical gold may potentially provide a hedge against inflation and a corresponding decline in purchasing power, while also potentially adding further diversification to your holdings.
Gold and other precious metals could potentially see significant price appreciation in an era of stagflation.
If you don’t own physical gold, now is the time to consider an allocation in this key asset class. If you already own gold, now may be the time to consider adding more to your holdings.
We believe that an IRA account is the ideal vehicle for accumulating physical gold or other precious metals. If you have an existing IRA, the process is simple and convenient. If you don’t have an existing IRA, our precious metals account executives can show you just how easy it is to set one up and begin acquiring physical gold today.
Don’t wait for a stock market collapse or loss of purchasing power before acting. Explore your options for physical gold ownership now. It’s as easy as picking up the phone. Call us today at 1-800-341-8584 to get started.Tags: advantage gold, commodities, CPI, expectations, gold, inflation, interest rate hike, stagflation, Stocks