Without question, the U.S. economy is currently on more solid footing than it was a few short years ago. The labor market is strong, with unemployment levels at the lowest levels in years, and recent growth figures have in some cases exceeded expectations. The Fed has even begun the process of monetary tightening, lifting interest rates off the ultra-low levels seen over most of the last decade. Recent tax cuts and massive government spending are certainly playing a role in the current economic expansion. Stocks are humming higher and investors seem to be more confident than they have in years.
The question is: Will it last?
The recent tax cuts combined with government spending have effectively “juiced” the economy over the last few months. Comparable to the afterburner on a jet engine, these measures have perhaps given the economy, and investors, some extra “lift” as they have taken effect. This added boost may not be sustainable for very long, however.
According to a recent article from kitco.com, Minneapolis Fed President Neel Kashkari does not feel certain that these recent measures will have a long-term effect on the economy. He was reportedly quoted at an event in Minneapolis as saying: “We know if you cut taxes on the margin that should boost economic growth in the short term. The question is when that short term is over, does it actually lead to longer-term, higher sustained economic growth? That’s unclear right now.”
The current economic expansion is already arguably running long in the tooth, and the next major recession could potentially be closer than investors realize. When that next recession does it, however, the Fed will be significantly more hampered in its ability to fight it. With rates likely to stay at low levels for some time to come, the central bank will not be able to replicate the “shock and awe” effect of sharp rate decreases as it did previously. The central bank could potentially have to once again resort to massive QE programs in order to stimulate growth, and such measures could have a dramatic effect on the dollar.
Right now is the time to be planning ahead for the next recession. When it hits, it could bring with it a massive decline in stocks and risk assets. A decline in the stock market of 20, 30, even 50% is by no means unlikely.
What better way to get a step ahead than to add diversity now with hard assets like physical gold?
Gold could potentially stand to benefit handsomely when the next major downturn begins. If stocks and risk assets begin to tank, yield hungry investors will be looking for places to put capital to work, and much of that capital could find its way into the gold market.
Gold prices are trading near a six month low currently, which may potentially allow investors to scoop up the metal at what could potentially be a massive discount.
If you prefer to try to buy low and sell high, what are you waiting for?
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and learn how this key asset class may potentially help insulate your portfolio during the next recession. Don’t wait for the next major downturn or for stocks to implode 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, central banks, Fed, gold, interest rate increase, long-term growth, monetary tightening, qe