This past week, the Federal Reserve raised interest rates by 25 basis points in a move that was widely expected. The rate hike announcement did not have a significant impact on markets, and stocks actually moved higher despite it. The central bank also stuck to its previous forecast of another three rate hikes in 2018.
Investors may not be buying it, however. Although the economy has shown major improvement in many areas, the sustainability of such improvements may be questionable. Then there is also the issue of the Trump administration’s tax bill. The potential for tax code reforms and a major reduction in the corporate tax rate has likely been a big factor in recent stock market gains. Companies may also be more willing to invest and to hire if they believe they will soon be paying a much lower tax rate.
The bill, however, could still have hurdles to passage. Although it seemed like passage was very likely just a few days ago, the Democratic victory in Alabama this week along with some other issues has raised some doubts. Although passage of some type of legislation remains very likely, any failure by the government to vote on and enact meaningful tax reforms could hit markets hard.
This is just one issue that could have a significant impact on stocks going into next year. That, along with the aging bull market, lack of inflation, geopolitical landscape and arguably overvalued market could all potentially give the Fed reason to pause. Don’t forget, the central bank also called for three hikes in 2016, yet only managed one at the end of the year.
You could make the argument that the Fed may be looking to hike rates simply so it has a monetary tool to fight the next recession and downturn in stocks. Any way you slice it, rates are not likely to go significantly higher anytime soon.
Given all of the risk being faced by equities and risk assets currently, now may be the ideal time to take some money off the stock market table and to add further diversification to your holdings. Hard assets like gold may be worth strong consideration. Gold has been considered a reliable store of wealth and value for thousands of years, and may potentially provide a meaningful hedge against inflation, deflation and weaker currencies.
The metal also potentially stands to gain from the next reversal in stocks, and such a downturn could come sooner rather than later.
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 gold ownership. Our associates are here to answer any questions you may have, and can even show you how to add this key metal to your holdings using your IRA account.
Don’t wait for the next major stock market collapse or for inflation to take a bite out of your holdings 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, Fed, gold, interest rate hike, tax reform, trump administration