Weekly jobless claims were reported at 220,000 this week, the lowest reading in several decades. Other key areas of the economy, such as manufacturing and housing appear to be on solid footing while economic optimism remains extremely high.
Through all of the recent data and market signals, one thing is clear: Despite still running below the Fed’s desired 2% target, inflation is picking up. Job creation, rising crude oil prices and rising yields seem to back up that notion.
The benchmark 10 year note is flirting with a 2.62% yield today, and thus far it appears that those who have called the end of the bull market in treasuries may be correct. Higher yields are significant, on a number of levels.
Rising yields indicate that investors are demanding more for to hold treasuries, and as worries over accelerating inflationary pressures increase, yields may continue their ascent. Contrary to what many analysts suggest, a rising rate environment is very bullish for gold. Gold may potentially offer a potent hedge against increasing inflation, and can also possibly offset some of the negative effects of a weaker dollar.
Climbing yields also present another bullish scenario for gold: The bull market in stocks is a decade old at this point, and at some point the equity party will come to an end. As yields climb, they present another option for investors-an option that is considered to be low-risk. With higher yields comes competition. As they move higher, more and more investors could elect to take money off the table in stocks, and move it into the perceived safety of bonds or other assets like gold. Substantially higher yields have the potential to be the primary catalyst for the end of the equity bull run, and investors could leave stocks in droves, creating a significant sell-off and market reversal in the process.
The writing is on the wall: Inflation is running hotter and may continue to heat up, and yields could continue their recent ascent in the months and years ahead. Now is the time to consider alternatives for when stocks eventually crash or reverse course.
Gold is several hundred dollars per-ounce lower than its previous all-time highs near the $2000 level. It could, however, make a rapid and sustained run not only back to those highs but beyond as changing market dynamics take hold. If you don’t already have gold as a significant part of your portfolio, now may be the ideal time to consider an allocation.
Adding gold to your investment portfolio has never been easier than it is today. Simply pick up the phone and speak with an Advantage Gold account executive. Our associates are here to answer any questions you may have, and can even show you how to buy and hold physical gold using your IRA account.
Don’t wait for hotter inflation to take a bite out of your purchasing power and real returns or for the stock market to come crashing down like a house of cards. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, gold, inflation, jobless claims, rising interest rates