As the benchmark S&P 500 stock index flirts with recent all-time highs once again, another market is making a run higher as well-the bond market.
Although stocks have a tendency to dominate the headlines and financial media, the bond market dwarfs the equities market in size. While stock investors have been able to shrug off numerous potential geopolitical issues and some weakness in economic data, bond investors appear to be of a different opinion.
In fact, the bond market appears to be signaling potential trouble ahead. Now, there is nothing to say that stocks and bonds cannot rise simultaneously, however, we suspect that at some point this will no longer be the case. One market may embark on a major reversal, while the other holds steady or continues to climb.
The question is: Who do you believe-stock investors or bond investors? And why might it matter for gold?
You can draw your own conclusions about this, but there are numerous issues worth consideration before you do. Issues like:
- The fact stocks have been moving higher for almost a decade now
- The fact that other global central banks are still very accommodative when it comes to monetary policy
- The fact that history has shown a recession could be nearing
- The fact that the global geopolitical landscape is fragile
- The fact that some analysts have suggested stocks are extremely overvalued at current levels
Not only that, but perhaps the Fed doesn’t want to raise rates as fast as many currently think. After all, it has been suggested that the rally higher in stocks has been largely fueled by a long era of cheap money and QE.
We see the potential crossroads ahead as a significant opportunity for gold. Rates may stay relatively low, and stocks could be setting up for a major decline. A major pullback or even crash in equities would likely serve to reinforce a stance of low interest rates, and given this scenario there could be a significant amount of investment capital that needs to find a new place to work. That “place” could be in hard assets like physical gold, silver and other metals.
The next major stock market reversal could fuel a substantial rally in gold from its recent trading range. Add to this the current geopolitical risks (North Korea and Russia among others) and you have a recipe for sharply higher prices.
The question is: would you rather buy gold at $1260 an ounce or $1500 per ounce? How about $2000 per ounce?
Regardless of how high gold may potentially go, in our view this metal has a place in your portfolio even without its massive potential for price appreciation. Gold has been considered a reliable store of wealth and value for thousands of years. It may potentially offer a meaningful hedge against inflation or deflation as well as declining paper currency values. It carries zero counterparty risk. It is recognized and valued all over the globe.
If your portfolio does not have an allocation in physical gold, now may be the ideal time to get started. And it has never been easier.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our precious metals professionals are here to answer your questions, and can even show you just how easy it is to buy and hold physical gold using your IRA account.
Don’t wait for the next major stock market crash before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, bond market, Fed, geopolitical risks, gold, interest rates, stock market