The highly anticipated September FOMC meeting has now come and gone. The Fed elected to hold rates steady by a vote of 7-3. Although this vote may have been closer than many had expected, perhaps more important than the vote itself was the central bank’s economic outlook and commentary.
The Fed’s so-called “dot-plot” is pointing to a very gradual pace of rate hikes, with the Fed Funds target rate also being lowered from a three percent target to a 2.9 percent target.
It is now expected that one hike will be seen this year (almost certainly in December as the Fed is not likely to tighten right before the Presidential election) and two hikes will be seen next year.
Although a lot of hawkish rhetoric has been floating around in recent months and although the Fed has seemed intent at times to hike rates, the central bank has found multiple reasons not to tighten.
Some might say that the Fed will only hike when it absolutely has to… Although some inflation indicators have recently shown increasing price pressures and some of the jobs data has been decent, many would argue that the current economic scenario does not seem to warrant an immediate hike by the central bank.
A December hike appears to be baked into the cake at this point, but with much of the uncertainty surrounding the Fed’s plans removed at this point, stocks and risk assets may potentially continue higher.
Let’s also not forget the Bank of Japan meeting earlier this week as well. The BoJ did not move rates further into negative territory (at least not yet) but did make some changes to how it will buy bonds. This is another dovish move by the BoJ, and more stimulus measures may be seen in the future.
All in all, many global economies will remain awash in cheap money as central banks continue to battle the global slowdown and deflationary forces.
This may provide a green light for stock investors to keep buying equities-equities which are already alarmingly overvalued according to some analysts.
As stocks climb higher and higher, in our opinion the likelihood of a massive equity market crash becomes greater and greater.
You can only stretch a rubber band so far before it snaps…
With the possibility of inflation picking up, dovish monetary policies remaining in place and an equity market crash that will make 2008 look like a walk in the park, now is the time to consider alternative asset classes for your hard-earned capital.
Precious metals like physical gold and silver have been through all types of economic conditions and have been considered a reliable store of value and protector of wealth for thousands of years. These metals can potentially appreciate in trying economic times and during periods of accelerating inflation. Investors may look to these perceived safe-haven assets when stocks are falling or when the economic outlook is cloudy.
If you don’t own physical gold or silver, now is the time to start!
Adding these key precious metals to your investment holdings is simple and convenient. All you have to do is pick up the phone.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold and silver ownership. Our representatives will be happy to answer your questions and can even show you how to buy and hold these physical metals using your IRA account.
Don’t wait for runaway inflation or for the stock market to see a massive sell-off. Consider an allocation in physical precious metals now. Call us today at 1-800-341-8584 to learn more.Tags: advantage gold, boj, central banks, Fed, fomc, gold, interest rate hike, stock market crash