This week, investors anxiously awaited the release of key inflation data that has the potential to be market-moving. On Wednesday, markets saw the most recent data on CPI. The month-over-month reading came in at .5%, above consensus estimates of a .3 or .4% rise. The core CPI reading, which excludes volatile food and energy costs, seemingly confirmed the higher month-over-month data with a rise of .3%.
Today saw the release of the latest data on PPI, which also points to increasing price pressures. Month-over-month PPI as well as the core reading both registered a rise of .4%-at the top end of estimates.
Stocks have seen significant volatility in recent weeks due in no small part to the notion of rising inflation and a more aggressive Fed. Recent data suggests that the central bank may be forced to mop up liquidity at a faster pace than previously expected, and the idea of higher rates is weighing heavily on equities and other risk assets.
The Fed must now attempt to walk a very fine line, as it looks to slow the economy down while also not forcing it into recession. This process is delicate, to say the least, and the central bank could easily miscalculate. This makes stock markets vulnerable to additional volatility and selling, and also may increase the risk of recession in the coming quarters.
Regardless of what stocks may or may not do, higher inflation can become very problematic. Higher inflation, in the simplest sense, means rising costs of everyday goods and services. As things become relatively more expensive, your dollars do not go as far. This can result in a decline in disposable incomes, a higher default rate on debt and other economic issues.
That is why it is so important, right now, to make sure that your portfolio contains asset classes that may potentially provide a hedge against the effects of higher inflation. The most ideal asset class for an inflationary scenario may be physical gold.
Gold has been considered a reliable store of wealth and protector of value for centuries. This asset class may potentially offset the effects of rising inflation, as it may hold its value or even increase significantly in value as the value of paper money declines. Not only that, but gold may also provide an important means of portfolio diversification, as it shows little correlation to more traditional asset classes such as stocks or bonds. Add the potential for significant price appreciation and there is simply no good reason not to have a significant allocation in this key asset class.
Recent data, as well as market behavior, suggest that more volatility could be ahead and that prices may continue to climb. 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 use the power of an IRA account to take advantage of gold’s numerous potential benefits.
Don’t wait for inflation to accelerate any further or for the next major collapse in stocks before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, CPI, disposable income, gold, inflation, ppi, recession