The stock market has made significant gains since the Donald Trump Presidential election victory in November. Stocks have moved higher on the notion of significant tax reforms and a large fiscal spending plan. Interest rates moved higher while the dollar index also saw a major boost. The gold market sold off on the Trump win. Investors appeared content buying stock and appetite for investment risk was robust.
Things could be turning, however.
Yesterday, the stock market saw its largest one day drop since October. Since October. Stocks had failed to forge fresh all-time highs in recent action, and yesterday finally saw a significant breakdown of the recent trading range.
Does this mean with certainty that the Trump rally has ended? Of course not. Could it be a good clue that investor sentiment may be shifting? We think so.
If stocks see further downside, much of the investment capital that has been put to work in the equities market could be yanked. If many investors really begin to scramble for the exits in a hurry, the market could potentially see a swift and severe pullback.
A pullback in stocks may come as no surprise at this point, but the question is will any major sell off become more than just a pullback. Could the selling seen yesterday be just the tip of the iceberg? Could the stock market be headed much, much lower? Perhaps.
You can certainly make the argument for a reversal in stocks. Investors may be coming to realize that any significant tax reforms are not likely to be implemented until next year, possibly even beyond. The same could also potentially be said for any massive fiscal spending plans.
In addition, the current administration is suffering from a very poor approval rating, and ongoing concerns over potential ties to Russia are just one issue among many that the administration continues to deal with. Concerns over the administration’s ability to implement its plans along with the general sense of uncertainty surrounding the administration could potentially lead to much lower stock prices, a weaker dollar and buying in perceived safe haven assets.
The gold market is within earshot of its recent highs, and a move beyond those highs could potentially signal the beginning of a new leg higher. Gold has performed well despite higher stocks and rising rates; perhaps some investors see reasons to be cautious.
If you aren’t concerned about the stock market and economy, now may be the time to take an objective look at the big picture, and consider starting an allocation in gold.
Gold has been considered a reliable store of wealth and value for thousands of years. The yellow metal may potentially provide a meaningful hedge against a number of economic and geopolitical issues.
Gold could also potentially be on its way to much higher prices. A return to the neighborhood of $2000 per ounce could be just the beginning of a major bull market. There is nothing to say that gold cannot reach $2500, $3000, $5000 per ounce or more.
The only question is: Would you rather buy it at $1250 per ounce or more?
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, and can even show you how to buy and hold physical gold using your IRA account.
Don’t wait for the next major stock market collapse before taking action. Explore your options for physical gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started.Tags: advantage gold, fiscal spending, gold, investor sentiment, stock market crash, stock market highs, trump administration, trump rally