Inflation data released today showed the ongoing absence of price pressures that could force the Fed to be more aggressive when it comes to monetary policy. The U.S. Labor Department reported this morning that the U.S. Consumer Price Index was unchanged in June. Consensus estimates were looking for a rise of .1%. Year-over-year CPI was also below consensus estimates, with an annualized reading of 1.6%.
All major components of the index showed broad-based weakness, with energy prices in particular showing a significant decline. Core inflation also failed to meet estimates.
The Fed has recently discuss the issue of weak inflation, and appears to be of the opinion that weakness in price pressures is transitory. Given the recent history, however, and the consistent weakness in price pressures, you have to wonder if the lack of inflation may be a bigger problem than the central bank is alluding to.
This latest data could potentially set the stage for a pause from the FOMC. Although rates may rise further this year, the central bank could elect to sit tight until December.
Looking at the bigger picture, the lack of inflation has to be a cause for concern. Although the economy has been described as robust and strengthening, lack of rising prices would clearly seem to indicate otherwise.
In fact, the economy is becoming due for a recession-some would even say overdue-and GDP targets of 2.5-3% may be out of reach.
Now may be the right time to consider what this might mean for your portfolio.
The U.S. and even global economy could be in for a protracted period of sluggish growth with little inflation. This could allow central banks to keep their feet on the gas with monetary policy and low rates. With stocks arguably becoming more and more overvalued, now may be the time to start looking at putting capital to work in alternative asset classes.
Given the current economic outlook, the potential for recession and the likelihood of ongoing low rates, now may be the ideal time to consider hard assets with little to no correlation to stocks and bonds. Now may be the ideal time to consider physical metals like gold and silver.
These assets may potentially outperform during a deflationary cycle, and could see substantial capital inflows once the floodgates open on the stock market. Stocks have been going higher for nearly a decade now, while gold has remained largely range-bound.
That could all be about to change.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold or silver ownership. Our associates are here to answer your questions, and can even show you how to buy and hold these key assets using your IRA account. Adding these assets to your holdings has never been easier or more convenient.
Don’t wait for the next stock market implosion or for prices to move sharply higher before taking action. Explore your options for gold and silver ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, deflation, fomc, gold, interest rate hike, low inflation, recession, slow growth