Will Tax Cuts Weigh on Gold?

The Senate has voted and passed a budget plan that could potentially pave the way for significant U.S. tax cuts. The House plans to take up the budget blueprint (approved by the Senate 51-49) as early as next week. A quick passage through the House could enable a tax cut plan to move forward expeditiously.

The initial reaction being seen on Friday is dollar strength and gold weakness. That’s all it is, however, a knee-jerk reaction. Whether or not tax cuts might weigh on gold and fuel further gains in stocks and the dollar remains to be seen.

Rumor has it that President Trump is leaning towards Jerome Powell to replace current Fed Chairwoman Janet Yellen. Powell is considered by some to be a policy dove, and he apparently has the backing of Treasury Secretary Steve Mnuchin. The treasury secretary likely knows full well the effect that rising rates could have on the still-fragile economic recovery. He also is likely quite aware of how higher rates could then affect the deficit, as strong economic activity will need to be seen in order to finance the tax cuts which will have a significant impact on the deficit.

The current scenario could potentially mean that interest rates will have to stay low for some time to come. Although this could fuel further upside in stocks as investors seek out a worthwhile return, it may also simply delay the day of reckoning for an equities market that is already very aged and arguably very overvalued.

The bottom line? Gold is likely to rise whether a tax cut plan gets implemented or not. The same reasons that gold was a good buy a month ago, a year ago, or a decade ago still apply today. Now, however, may simply be the time to begin diversifying with gold or adding to existing holdings before prices rise further. In fact, a tax cut could potentially free up more investment capital that could be used to add further diversity to your portfolio.

With each new high in stocks, the odds of a major market crash would seemingly be on the rise. The market could be operating on borrowed time, and savvy investors know that right now is the time to take action for the inevitable stock reversal.

Adding hard assets like physical gold to your holdings may not only provide the potential for significant price appreciation, but it may also potentially provide a means to hedge dollar weakness, inflation, or other economic issues.

Buying and holding physical gold has never been easier than it is today. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to take advantage of gold ownership using your IRA account.

Don’t wait for the next major stock market collapse or bear market before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.

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