Wednesday’s release of the highly anticipated Fed meeting minutes were essentially a non-event. Although no action is expected from the central bank until, next month, some investors did seem to be a bit nervous as the new Fed Chairman, Jerome Powell, takes the reigns. The central bank did stick with some similar language, as it suggested that it would on a path of gradual rate hikes.
Of particular note, the Fed did raise its inflation expectations and stated that core personal consumption expenditures would rise significantly over the next year. The minutes also showed that several Fed officials seemed to be concerned about upside risks to the economy.
Within this context, there are two key issues that can be considered: First, that inflation-or higher prices-are likely to be seen this year. Secondly, the economy could potentially overheat and force the central bank to act more aggressively with monetary policy.
Higher price pressures can cause a number of economic issues, and the threat of inflation can send markets into a tailspin (as has been seen over the last few weeks with heightened market volatility and some solid selling).
The Fed is now in a position in which it must try to successfully walk a tightrope: Hike too aggressively, and the economy can stall. Hike too little too late, and inflation can accelerate. To normalize monetary policy while also shrinking its balance sheet, the central bank must effectively avoid any missteps.
Markets do, however, like lower rates, and the Fed may not want to “upset” the stock market by hiking too fat or too much. In such a scenario, the risks of heightened inflation may be greater, and investors need to consider the effects of rising price pressures now rather than later.
Regardless of what the Fed does, the rally in equities could be coming to an end. Given the outlook for rising price pressures and perhaps the end of the stock bull market as well, investors cannot afford to be complacent. That is exactly why now is the ideal time to consider alternative asset classes that may potentially provide a hedge against inflation while also providing significant upside potential.
The current economic and geopolitical landscapes could enable hard assets like gold to outperform. As inflation increases, investors will be looking for asset classes that can potentially help preserve wealth and purchasing power. As stocks begin to reverse course and head south, investors will be looking for alternatives that can provide return potential.
If you do not already have physical gold as a key component of your portfolio, now is the time to consider an allocation. Adding this important asset class to your portfolio has never been easier, and it can potentially serve an important purpose through all phases of market activity.
Speak with an Advantage Gold account executive today about the potential benefits of gold and how it might play a key role as inflation heats up. Advantage Gold associates are here to answer any questions you may have, and can even show you how to harness the power of an IRA account to buy and hold this critical asset class.
Don’t wait for further declines in your wealth or purchasing power 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, equities rally, gold, inflation expectations, interest rate hikes, jerome powell