There is no doubt that the economy is on stronger footing than it was a decade ago. Whether or not the current path can be maintained, however, is another question entirely. With improvement in the labor market, a stable real estate market and economic optimism at its highest in some time, you have to wonder if the Fed may need to become more aggressive at some point.
New York Fed President William Dudley recently commented on this very issue. In an article from Marketwatch.com, Mr. Dudley alluded to the notion that the central bank may have to “press harder on the brakes” at some point, which could increase the likelihood of a hard landing for the economy.
In the same article, Dudley also provided some thoughts on the recent tax legislation. He was quoted as saying “While this does not seem to be a great concern to market participants today, the current fiscal path is unsustainable.”
So within Mr. Dudley’s comments are two very specific areas of concern: A hard landing for the economy and debt. Both of these issues could potentially fuel higher gold prices, while also possibly acting as a catalyst for a significant sell-off in the dollar.
Although the idea of rising rates may be considered bearish for gold by some, a hard landing or recession could fuel buying in perceived safe haven assets like gold. Not only that, but if stock markets tank and the economy slows significantly, the Fed could be forced to backtrack and begin cutting rates once again.
The debt issue is a whole new animal. Although the tax legislation may give the economy a boost and stoke growth, it has yet to be determined how it will be paid for. Rising deficits may be unsustainable, and drastic cuts elsewhere may need to take place to finance the cuts. Either way, increasing debt could have a very bearish effect on the dollar, and could give investors a very compelling reason to diversify with hard assets like bullion.
These are two major issues that will need to be dealt with, and if you don’t already have an allocation in physical gold, now is the time to consider getting started. Doing so has never been easier. Gold may potentially provide an important hedge against a declining stock market as well as falling currency values. It also has significant potential upside, and unlike paper assets carries no counterparty risk. In the current economic and geopolitical environment, it could play a very important role in the years and decades ahead.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our account executives are here to answer your questions, and can even show you how to incorporate real, physical gold using your IRA account.
Don’t wait for the next recession or for exploding debt to take a bite out of the dollar and your purchasing power. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, couterparty, deficits, dudley, fed policy, gold, rising interest rates, tax legislation