Let’s be clear about something: The ongoing escalation in tensions with North Korea may be having an effect on the gold market, but is it not the primary driver of gold. Gold had a very strong session on Monday to begin the trading week before news of another missile test by North Korea hit the wires.
The fact is, there are numerous potential black swans that could really derail global equity markets and drive a massive spike in risk aversion and overall market volatility.
North Korea is certainly at or near the top of the list. The continued provocations by the North Korean regime are not likely to go unanswered. The question now becomes what type of response may be appropriate. Further sanctions and other ways of squeezing the nation economically are likely to be tried, however, the U.S. appears ready to leave all options on the table and military options cannot be ruled out. The coming days may provide further clues as to U.S. intentions, and the threat of war breaking out on the peninsula could keep investors averse to risk.
Whether you are a Trump supporter or not, typical Washington gridlock is stalling the administration’s plans for key tax reforms and infrastructure spending. Markets had rallied on the notion of tax cuts and a massive infrastructure spending package. Thus far, these have not come to pass (regardless of who may be to blame) and investors may get more and more frustrated. This could potentially set the stage for a decline in stocks and other risk assets.
Speaking of stocks, the bull market is a decade old at this point and the market has not seen even a 5% pullback for quite some time. Not only could stocks could be considered frothy at current levels, but the low volatility environment could also be setting up for a spike. The VIX has been trading at or near its lowest levels on record for some time now as well, and volatility could potentially make a comeback in dramatic fashion.
There are other risks to the economy as well including an ongoing lack of inflation and cheap oil prices.
The point is this: There are numerous major economic and geopolitical risks currently that warrant caution. Now may be the ideal time to consider adding further diversification with hard assets like physical gold.
Gold may potentially increase in value in such an environment, while at the same time potentially providing a meaningful hedge against inflation, deflation, declining currency values and more.
With gold recently staging an upside breakout from its previous trading range, now may be the time to get involved in what could potentially turn out to be a protracted bull market.
Adding physical gold to your holdings has never been easier than it is today. 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 meltdown or spike in volatility 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, black swan, bull market, gold, gridlock, north korea, tax reform, vix