Although 2008 – 2009 may seem like a long time ago at this point, many will remember the financial market mayhem like it was yesterday. Numerous investment professionals and even central bankers are now sounding the alarm bell, citing some eerie similarities between then and now.
High-risk lending has been on the rise over the last year or so, and it was high-risk lending that triggered the mortgage meltdown in 2008. It is easy to understand how such lending is one the rise, however. GDP levels have been improving, the Fed recently began raising interest rates and the global economy appears to be on more solid footing.
As the next G20 summit approaches, the Bank of International Settlements has reportedly said that central bankers need to keep markets in check in order to prevent a another major crash.
The stock market, and its over-the-top valuations, could be simply another major sign of risk getting out of control once again.
The seeming disconnect between lofty equity values and low yields could be a cause for concern. At some point, this disconnect is likely to see a correction, and it is possible that stocks could come out on the losing end in a major way.
Claudio Borio, chief economist for the Bank of International Settlements, was recently quoted as saying: “Leading indicators of financial distress point to financial booms that in a number of economies look qualitatively similar to those that preceded the great financial crash.”
Borio seems to believe, however, that countries that were at the center of the last major crash will not be at its center this time around. Rather, mature economies like that of Canada or Sweden that have seen booms in borrowing and credit may take center stage.
The BIS also reportedly warned of the dangers of low rates for too long, even as rising U.S. interest rates could make borrowing more expensive and fuel rising bankruptcies.
Any way you slice it, the risks for another major crash appear to be rising-and quickly. The question is: Will investors heed the warning signs and get out before the next crash occurs?
If 2008/2009 provided any lessons, it is that greed can be extremely dangerous, and a lack of total portfolio diversification can be catastrophic for savers.
Now may be the ideal time to take such risks into consideration, and consider diversifying with some alternative asset classes.
Hard assets like physical gold and silver may potentially outperform during a market crash or protracted bear market in stocks. If you do not already have an allocation in these assets, now may be the ideal time to get started. Fortunately, diversifying your holdings with physical metals has never been easier.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold and silver ownership. Our associates are here to answer any questions you may have, and can even show you how to use your IRA account to diversify further with real, physical metals.
Don’t wait for the next major market crash to take a massive bite out of your portfolio. Explore your options for physical gold and silver ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, bank of international settlements, bis, central banks, G20, gold, high-risk lending, interest rate hike, mortages