Rising Inflation

The gold market may potentially be benefiting from rising price pressures, among other things. The yellow metal has performed well in recent weeks, and has been on the stronger side of the ledger even in spite of stocks making fresh all-time highs and the dollar index remaining higher.

This week saw some key inflation data that showed price pressures are on the rise. On Wednesday, the latest reading on the Consumer Price Index showed a rise of .6 percent last month, well above consensus estimates of a .3 percent rise. This rise represents the largest increase in several years, and would seemingly be indicative of rising inflation.

The year-over-year core inflation rate, which strips out the volatile food and energy components, came in at 2.3 percent, well above the Fed’s desired target of 2 percent.

Fed Chairwoman Janet Yellen spoke this week and seemed to sound considerably more hawkish. Although the notion of higher rates may at first seem like a bearish factor for gold and metals, rising inflationary pressures may potentially counteract the effects of higher rates.

Given the rise in price pressures, it is no wonder that gold is seeing ongoing buying interest in spite of some potentially negative outside markets.

Gold may potentially hold its value, or even increase in value, during times of rising inflation. This becomes especially important as inflation takes hold. Consider this: With rising inflation, increasing price pressures will chip away at your investment returns, lowering your real returns. For example, if you own a fixed income product that yields a 5% return, but inflation is on the rise, that 5% may only represent a 3% net return after factoring in inflation (obviously this depends on the numbers). The point, however, is that inflation can take a bite out of your purchasing power and returns and it needs to be considered when making investment decisions.

The fact is that there are numerous reasons to consider buying gold right now. Take a moment and consider:

  • Uncertainty about the Trump administration
  • Geopolitical tensions
  • Improving technical posture
  • Recession potential
  • Aging bull market in equities

Rising inflation is just another reason you may want to consider buying gold and other precious metals.

Adding these key asset classes to your portfolio can potentially provide a meaningful hedge against a number of economic and geopolitical issues like inflation, declining currency values and more. Gold can potentially help protect purchasing power, and has the potential to increase in value as inflation rises.

What are you waiting for?

Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our associates are here to answer any questions you may have about buying and holding physical gold, and can even show you how to accumulate gold using your IRA account.

Don’t wait for the next stock market crash or for inflation to take a bite out of your purchasing power. Explore your options for physical gold ownership today. Call us at 1-800-341-8584 to get started.

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