The gold market has come under some selling pressure in recent weeks and can be viewed in one of two ways: First, that the recent rally is failing and that further downside could potentially be seen or, secondly, that the current dip from recent highs is nothing more than back and fill trade and an excellent opportunity to buy gold at a relative discount.
Sure, the dollar index has been rebounding a bit and that may be weighing on gold. And yes, stocks remain at all-time highs which also may not be doing gold any favors. Adding insult to injury, the Fed recently maintained its current outlook for another rate hike this year and an additional three hikes next year.
The important question is: Does any of this really matter?
Stocks as well as the dollar are not likely to continue to rise indefinitely. The dollar index is seeing some short covering and also some buying interest likely due in large part to the possibility of major tax reforms. Stocks have been going up for a decade now, and regardless of what the permabulls might suggest, the rally is not likely to go on much longer. As far as the Fed goes, it is also important to not forget the fact that the central bank had intended to hike rates multiple times in 2016 as well, yet only raised rates once at the end of the year.
Looking at the bigger picture, the current bumps in the road for gold may be viewed as nothing more than noise. Just as institutional traders tend to focus not on intraday charts but on daily, weekly and monthly charts, long-term gold investors out not focus on insignificant market gyrations but rather the long-term potential for price appreciation as well as the other potential benefits that come with physical gold ownership.
In another example, a savvy long-term stock investor may use a dollar cost-averaging strategy to acquire more total shares at a lower overall cost basis. If the investor believes in the long-term prospects for the company, then he or she is likely happy to be able to pick up shares at a relative discount when they dip in price.
The point is this: Don’t be fooled by the notion of a higher dollar, even higher stocks or even an aggressive Fed. With the big picture in mind, there is just as much-if not more-reason to buy gold after it has declined in price.
Adding this key asset class to your portfolio has never been easier than it is today. All you have to do is pick up the phone and speak with an Advantage Gold account executive. Our associates are here to answer any questions you may have, and can educate you on the potential benefits that come with gold ownership. Advantage Gold representatives can even show you how to buy and hold real, physical gold using your IRA account.
Smart investors learn to ignore the noise. Shouldn’t you do the same? Don’t wait for higher gold prices or for the next major equity market collapse before taking action. Discuss your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, bull market, cost-averaging, dollar index, gold, selling pressure, Stocks