The stock market is frequently mentioned when gold is discussed in the financial media. This makes perfect sense, given the fact that gold is often bought during times of market duress and may underperform when equity markets are headed higher.
Although stocks remain not far from recent all-time highs, there could be something even more critical to financial markets in the near-term. The yield on the 10 year note is not far from crossing an important line.
World renowned money manager Bill Gross believes that 10 year yields hold the key to everything this year. In a recent article from CNBC.com, Gross was quoted as saying “If 2.6 percent is broken on the upside…a secular bear bond market has begun. Watch the 2.6 percent level. Much more important than Dow 20,000. Much more important than $60-a-barrel oil. Much more important than dollar/euro parity at 1.00. It is the key to interest rate levels and perhaps stock prices in 2017.”
According to the same article, Gross used his newsletter back in August to warn investors against both stocks and bonds and instead to focus on real assets like gold and real estate.
Yields have backed off from recent highs, and it is quite possible that yields may continue to trickle lower as investors await new economic policies implemented by the Trump administration.
Gold could potentially have further room to run to the upside in the meantime, as the rapid rise in yields has potentially run its course for the time being.
Gold could potentially rise whether rates rise again or fall. If yields cross the key 2.6 percent level, rates may continue to rise. As rates rise, demand for equities could potentially fall, halting the multi-year rally in stocks. If significant stock selling should begin to take place, investment capital could potentially find its way into gold and other precious metals.
On the other hand, if rates have topped out for now, or if a lack of progress by the new administration fuels a drop in rates, gold investors may see that as a major green light to buy with both hands at or near current price levels.
Gold has potentially found a long-term bottom, and recent action is encouraging for the bulls. With the possibility of both interest rates and the dollar having found a near-term top, gold may continue to see further buying interest.
This year will potentially bring with it significant economic and geopolitical change. Although interest rates may possibly hold the key to numerous asset classes in the year ahead, we believe that gold could be well-positioned to move higher for numerous reasons.
If you are getting nervous about the stock market or what may lie ahead economically, now is the time to consider some alternatives. Now may be an ideal time to consider an allocation in physical gold or silver.
Diversifying your portfolio with physical precious metals has never been easier than it is today, and current prices could potentially be at a long-term low.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold and silver ownership. Our precious metals professionals are here to answer your questions, and can even show you how to buy and hold physical precious metals using your IRA account.
Don’t wait for the next market crash or for gold and silver prices to rise before taking action, Explore your options for physical gold and silver ownership today. Call us at 1-800-341-8584 to get started.Tags: advantage gold, bear market, bill gross, bond market, bond yields, gold, interest rate hike, stock market