Price action in gold recently has seen some significant whipsaws. Given the numerous bullish issues that could serve as the backdrop for a sustained rally higher, many investors may be wondering what might be driving the current selling pressure and volatile price action. Could it be the Fed?
The Trump administration has been moving closer to a decision on who the next Fed Chair may be. Although current Chairwoman Janet Yellen may still be in the running, rumor has it that President Trump is leaning towards Jerome Powell to take the post when Yellen’s term expires next year. Markets and investors may simply be taking a wait-and-see approach right now, as a decision may be made this week.
The question is: Does it really make any difference? Powell, like Yellen, is generally seen as a policy dove. He would seemingly be the “safe” bet if Janet Yellen does not remain the top central banker. Powell is seen as someone who likely would not rock the boat, and who would essentially look to stay the course that Yellen’s Fed has already laid out.
Of course, the same challenges faced by the Yellen-led Fed will still remain when the next chair takes over. Powell, or whoever it may be, will still have to contend with low inflation, sub-optimal economic activity and numerous other factors. While the current dot-plot shows another three rate hikes next year, additional moves could very much become questionable given so many of the current issues being faced by the economy and global financial markets.
This brings us to the second possible issue holding up gold right now: A pending rate hike before the end of the year. As has been seen numerous times before, gold and other markets have a tendency to go into a holding pattern when action is expected from the Fed. Gold, however, has a tendency to rally once that action has been taken-even if that action is a rate hike.
The current pullback in gold, therefore, may represent nothing more than a great opportunity to buy gold at a relative discount. The question is: Will you take advantage of the opportunity?
Once the smoke clears and the dust settles concerning rate hikes and who the next leader of the Fed may be, the significant issues that could propel gold higher will still exist. A weaker dollar, exploding deficit levels, geopolitical tensions and the potential for a major stock market meltdown are not likely going away anytime soon.
That makes right now a great time to look to diversify with hard assets like physical gold. Adding gold to your portfolio has never been easier than it is today, and such investments may potentially provide not only the potential for price appreciation, but also a means of hedging against declining currency values, a stock market reversal and inflation.
Speak to an Advantage Gold account executive today about gold’s potential place in your portfolio. Our associates are here to answer any questions you may have, and can even show you how to incorporate physical gold into your IRA account.
Don’t be distracted by the possibility of further rate hikes or who may become the next Fed chief. Take steps to add diversity and protect your wealth today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, dot-plot, Fed, gold, inflation expectations, janet yellen, jerome powell