The gold market continues to remain on the defensive, as prices have not been able to distance themselves from 12-month lows. Weaker crude oil, a stronger dollar, rising yields and higher stocks have all taken a decidedly bearish toll in recent weeks.
Selling pressure has seen the metal drop to 12-month lows, while also potentially threatening to take it down even further. Sentiment in the sector is bearish, and could arguably be seeing an extreme level that may not be sustainable. In other words, right now may be the time to buy.
The market is likely to decline into some major long-term support in the sessions ahead. Although anything is possible, it is difficult to imagine a scenario in which the metal goes significantly lower from recent levels. That being said, if prices were to decline further it could represent a great opportunity to dollar-cost average and lower your overall cost basis.
What may make gold’s recent declines even more powerful is the timing of the drop. The yellow metal is moving lower and trying to find more solid footing at a time when stocks are arguably becoming more and more overvalued. Not only that, but the potential for the next great recession could also be on the rise as the Fed looks to continue on its current path of gradual rate hikes. The dollar has also been getting in on the action, making multi-month highs as inflation expectations have been moving up and as recent tax cuts and government spending programs work their way through the economy.
None of these potentially bearish factors for gold is likely to last, however. At some point, the dollar bulls will recognize that current debt levels are unsustainable. At some point, the economy will fall back into recession. At some point, the Fed will be forced to cut rates again or reintroduce QE measures. And at some point, stocks will once again come crashing back down to earth, erasing billions in investor value in the process.
When some of these changes begin to occur-and that could be much sooner than many anticipate-the gold market could not only reverse course and start heading higher again, but it could potentially see fresh all-time highs as investors flock to its perceived safety. Indeed, the next great asset reallocation could be substantial and gold could be the leader of a multi-year cyclical bull market in alternative asset classes.
This is what makes today’s prices such a bargain that should be taken advantage of. Not only is gold likely to find a bottom sooner rather than later, but it could potentially see a massive reversal higher, just as stocks did following the collapse of 2008/2009. The investors who saw value in stocks once they had declined sharply a decade ago have been handsomely rewarded. As the bull market in equities draws to a close, however, it is time to consider where the best current value may be.
If you see the great value in an asset that may not only potentially increase sharply in price but may also potentially provide a meaningful hedge against numerous economic and geopolitical issues, now is the time to act. That same asset class also happens to be some 40% off its all-time highs, possibly making current prices a significant long-term bargain.
Don’t wait for the next major recession or stock market collapse before taking action. Explore your options for gold ownership today. Speak with an Advantage Gold account executive today about how this key asset class may fit into your portfolio, and how you can even build an allocation using your IRA account. Pick up the phone today and call Advantage Gold at 1-800-341-8584 to learn more.Tags: advantage gold, gold, government spending, inflation, qe, selling pressure, tax cuts