The gold market has remained under some renewed pressure, as slow summer trading conditions as well as a lack of risk aversion continue to take a toll on the metal. With so many issues currently working against the market, it is not surprising that prices have thus far been unable to rally.
The dollar index has played a huge role in gold’s lack of upside in recent months. The greenback is hovering around a 12-month high still, and has thus far not shown any real signs of weakness. The latest ECB meeting isn’t helping, either. The central bank clearly appears to be in no major hurry to start hiking interest rates, and has made clear that some degree of monetary stimulus is still appropriate. This may keep the euro currency under further pressure, while potentially boosting the dollar even further.
In addition to the ongoing dollar strength, the gold market is also grappling with higher stocks and a strong appetite for risk. The NASDAQ recently hit a new all-time high, and other key benchmarks remain within striking distance of previous highs. Thus far, the notion of higher interest rates has not put a dent into investors’ hunger for stocks, and markets could very well challenge previous highs in the days and weeks ahead.
Adding to a lack of risk aversion is the recent agreement between the U.S. and the EU to put a halt to tariffs. The U.S. has reportedly reached an agreement with the EU after gaining some concessions on trade. This is an important step in bringing the countries back from the brink of what could be a nasty tit-for-tat war on trade.
Any way you slice it, however, investor complacency seems to be on the high side. Given many of the larger fundamental issues still at play, such as massive debt, a long-term downtrend in the dollar and the risk of the next recession, the current state of investor confidence could quickly turn into a state of malaise. Once the next recession does hit, the global economy could have a significantly more challenging time fighting it. In fact, the next major recession could be longer and deeper than the recession of 2008/2009. Just as happened during the last recession, stocks could see a massive amount of value lost if the market were to see declines in the 30, 40 or even 50 percent or beyond ranges. For many investors, this could wipe out all of-or even more than-all of the gains that have been made during the last several years.
That is why right now may be the ideal time to consider diversifying with alternative asset classes and physical gold should be at the top of your list.
Gold not only has tremendous upside price potential, but may also serve as an important hedge against rising inflation, a weaker dollar and numerous other economic and geopolitical issues. Given the market’s recent declines, now may potentially prove to be an excellent buying opportunity, acquiring the metal at what may turn out to be fire-sale prices.
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 easy it is to incorporate this key asset into your portfolio using an IRA account.
Don’t wait for the next major stock market crash or for the next great recession to take hold. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, dollar index, ecb, gold, greenback, investor confidence, nasdaq