The stock market continues to show strength as it remains on a decidedly upward trajectory. Recent articles in financial media have even discussed the possibility of a good old-fashioned melt-up in stocks from current levels.
Although the market could certainly see further gains from current levels, eventually the stock bulls will run out of gas and things will turn. While no one knows when stocks could reverse course or even collapse, the magnitude of those declines would seemingly be increasing with each and every new leg higher in stocks.
Complacency can be a very dangerous thing, and it seems to be running rampant right now as more and more investors jump on the equity bandwagon. This does make a lot of sense, actually, as those investors that have remained on the sidelines for much of the recent rally in stocks simply cannot take the pain of not being in the market any longer. It is when these final waves of investors finally jump in that things can get dicey.
Market volatility is at all-time lows, and no one seems to be significantly concerned about any of the multitude of potential issues that could derail markets or the economy. The CBOE VIX gauge is under $10 currently, and it has not seen any significant spikes higher in quite some time. If, or perhaps more appropriately when, volatility does rear its ugly head again the market’s reaction could be substantial.
Once the last equity investor has been sucked into the market, any signs of increasing volatility could shake out weak longs and have a cascading effect. As stocks begin to falter, more and more investors-especially those late to the party-could look to liquidate in a hurry. For those that have ridden the market higher for years, they may be keen on booking profits as quickly as possible once sign of trouble emerge.
The end result of this could be a massive liquidation that sees stocks drop 10, 20, 30 percent or more. The herd mentality is currently at work now, and it will also be seen once stocks change direction.
As such a situation unfolds, investors will be aggressively looking for alternative asset classes in which to put capital to work. Gold, silver and other metals could be a primary beneficiary of such a scenario.
While the current gains in stocks may be nothing more than an illusion, potential gains and value provided by these asset classes are real. Not only can metals appreciate significantly in value from current levels, but they may also provide a meaningful hedge against numerous geopolitical and economic issues such as inflation, deflation or declining currency values.
Now is not the time to be complacent, but rather to be proactive.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and how these asset classes may play a key role in your portfolio. Our associates are here to answer any questions you may have, and can even show you how to incorporate physical gold in your portfolio using your IRA account.
Don’t wait for the next major stock collapse to erase billions in investor value before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, bull market, complacency, equity bandwagon, gold, vix, volatility