The gold market has posted solid gains since the beginning of the year, and thus far is not showing any significant signs of slowing down. From a technical standpoint, the yellow metal looks poised to make another run to the upside.
What makes all of this especially interesting is the fact that gold is rising along with stocks. Even bonds have been moving back up as rates have been declining.
So what gives?
It would seem to be very clear that despite new all-time highs being made in equities a degree of risk aversion remains alive and well in the marketplace. Some investors have been buying gold rather than chasing equity markets higher. The question is why…
That question could potentially be answered with a whole lot of different responses. For starters, it remains unclear exactly what the Trump administration has in mind for fiscal spending and tax reforms. There has been considerable talk about these subjects, but thus far very little in the way of details.
Perhaps that will change tonight when President Trump addresses Congress.
If the President provides more details about his plans, the recent rally in equities could potentially continue. If, on the other hand, further details remain scarce, stock investors could possibly begin to get anxious and start booking profits.
And what about the mixed signals the markets are giving right now.
Gold has been rising with stocks and bonds. Although there is nothing to say that this could not continue, it would seem that at some point something’s gotta give. After all, gold and bonds are often bought in times of uncertainty and market risk aversion.
Why then is capital still flowing into gold and bonds as stocks continue their seemingly endless ascent into the stratosphere?
Perhaps someone knows something the average investor doesn’t?
More than likely, perhaps some investors want to get ahead of the curve and buy gold while prices are at current levels and avoid buying stocks near what could possibly be a long-term top.
Not to mention the considerable amount of uncertainty surrounding the Trump administration’s plans for the economy and many of the issues currently being seen (such as the ongoing feud with the media and concerns over possible ties to Russia).
Stocks have been climbing for eight years, inflation is on the rise, and the geopolitical climate could potentially fuel risk aversion.
Why wouldn’t you buy gold in such an environment?
If you see some causes for concern, now is the time to act. Consider an allocation in physical gold, silver or other precious metals. Adding these metals to your portfolio has never been easier, and they can potentially add further diversification to your portfolio.
Speak with an Advantage Gold account executive today about the potential benefits of gold or silver ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold physical gold and silver using your IRA account.
Don’t wait for the next major stock market collapse or economic crises before taking action. Explore your options today. Call us at 1-800-341-8584 to get started.Tags: advantage gold, congress, fiscal spending, gold, president trump, risk aversion, stock market crash, tax reforms