Alternative asset classes are more important than ever, and investors have never had so many vehicles with which to diversify their portfolios. This would seem to be especially important in the current environment, where neither stocks nor bonds may offer investors a good value.
The stock market has been on the rise for the last decade. Although it is impossible to say exactly when the bull market may finally come to an end, history would seemingly indicate that the current bull could run out of gas at any point. The stock market ascent has been fueled in no small part by ultra-low interest rates and quantitative easing. These tools used by the Fed and other global central banks essentially force risk-taking, as investors are left with no other viable choices. With fixed income and other investment vehicles offering nothing (or sometimes even negative rates), investors turn to stocks to try to make returns that will stay a step ahead of annual inflation rates.
The artificially high levels seen in stocks may not be sustainable in an environment where monetary policy is more in line with historical norms. In fact, stocks have already begun to be tested, as the Fed has indicated higher rates are on the way as well as the unwinding of its massive balance sheet.
The 30 year bull market in bonds and notes is also at or very near the end of its rope. Interest rates have already begun to climb (bond prices and rates move inversely), and more supply is going to be hitting the market. As the Fed looks to unwind its balance sheet, it will refrain from purchasing new bonds and will allow expiring notes to simply roll off. Not only that, but the U.S. is set to sell a massive amount of fresh debt in order to fund operations. With the potential for a very large increase in supply, rates are likely to go higher-perhaps significantly higher-before buyers are willing to set in.
The above scenarios could indicate that both stocks and bonds represent a risk at current levels, and may not provide investors with value.
Given these changing market dynamics, it is more important now than ever before to be well-diversified and to include investment vehicles that have little to no correlation to traditional asset classes. Given rising inflation levels and dollar weakness, gold should be at the top of your list.
Gold has been considered a reliable store of wealth and value for centuries, and is valued anywhere on the globe. This asset class shows little correlation to stocks and bonds, while also having significant upside price potential. It may be especially useful given rising inflationary pressures and a weaker dollar, and can not only potentially smooth out portfolio volatility but may even potentially offer increased return potential.
Adding gold to your holdings has never been easier than it is today, and now may be the ideal time to do exactly that as stock and bond markets enter new phases.
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 buy and hold this key asset class using your IRA account.
Don’t wait for the next major leg lower in stocks or for rising inflation to erode your purchasing power further. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, alternative assets, central banks, gold, monetary policy, stock market