The recent spike in market volatility seen this past week based on unfolding events in Italy should only serve to underscore the importance of being hedged against increasing volatility and rising yields. Although markets are seeing a sense of calm return the last couple of days, the EU-and global markets-remain vulnerable to geopolitical developments that threaten the status quo.
It is also important for investors to understand a critical point: That without global central banks still pumping money into the financial system, things could have been significantly worse. The rally seen in treasuries this past week and the sell-off in Italian government paper should serve as an important reminder for just how quickly things can turn in the financial markets. Without ongoing central bank support, the next selling frenzy could potentially do far more damage.
The Fed is leading the way towards normalizing monetary policy, and other central banks will likely follow suit in the months and years ahead. Higher inflation in the U.S. may force the Fed’s hand, and the central bank could even have to act more aggressively than previously anticipated. The ultra-low interest rate environment and bond buying could become a thing of the past, and without that backstop in place, markets could turn ugly quickly.
The recent worries over Italy could be just the tip of the iceberg. If the nation were to leave the EU, it would be the next big domino to fall following the “Brexit” of 2016. Regardless of whether or not the nation does remain in the union, some analysts have suggested that the current EU financial system is broken, and it is only a matter of time before things must change.
Italian elections are also going to be taking place at a time when the ECB is looking to wind down its bond buying program. Needless to say, this could be a critical time for the union and its regional economy. As the central bank looks to remove its monetary backstop, the next sovereign debt scare or political turmoil could potentially send shockwaves not only through Europe global markets as well.
This past week’s sell-off in Italian paper and global equities could be just a glimpse of what is to come as further troubles in the EU come to light. They are also an important reminder of why it is critical for investors to maintain significant allocations in perceived safe haven assets such as physical gold.
Adding this key asset class to your portfolio has never been easier than it is today. Gold can not only provide a potential hedge against geopolitical events, inflation and lower stocks, but it also carries with it enormous upside price potential.
The next major sell-off could make this past week, and even the sell-offs of 2008/2009 look like a walk in the park. The time to diversify with hard assets is now.
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 build a significant allocation in this key asset class using your IRA account.
Don’t wait for the next major market collapse 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, brexit, ecb, Fed, gold, italy, monetary policy