The gold market has begun the new trading week on its back foot, as prices have slid below the psychologically important $1200 level. A lack of fresh, bullish catalysts combined with low summer trading volumes have given sellers a distinct advantage-for now.
The dollar trade continues to be a thorn in the market’s side, with the greenback strengthening further as concerns over Turkey and potential contagion in the region increase. The Turkish Lira has been a major headliner in the financial media in recent days, and the currency is losing more ground as the new trading week gets going.
Turkey has benefited from some significant investment in recent years, as the nation could potentially offer higher yields compared to the U.S. or Europe. With rates on the rise in the U.S. and other regions readying to normalize monetary policies, much of the capital that had been put to work in Turkey and other emerging markets could potentially find its way into alternative areas that may be perceived as being “safer.”
Although the crisis in Turkey has thus far been largely local, there is a risk of contagion as numerous large European banks have significant exposure to the region. This risk of contagion has done little for the gold market, however, and has driven buying in the dollar index. This stronger dollar is likely the primary reason that gold prices remain on the defensive. How long the greenback may stay strong is the subject of much debate.
Some analysts have already suggested that the dollar will likely top out in the months ahead. Increasing deficits, the potential for recession and other issues could set the stage for a major reversal in the currency. Such a reversal could potentially fuel significant buying interest in the metal, although the market could potentially begin to take off before the dollar rolls over again.
The unfolding story in Turkey and the potential for an economic collapse in the region are good reasons to take stock of your portfolio. Although such issues may not come up every year, or even every few years, they do have the potential to roil global financial markets. This underscores the importance of maintaining a strong allocation in alternative asset classes that do not carry counterparty risk and cannot simply default or go bankrupt. In modern financial markets, there is really only one asset class that may serve such a purpose, and that asset class is physical gold.
Adding this key asset to your portfolio has never been easier, and more important. 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 utilize the advantages of an IRA account when building a significant allocation.
Don’t wait for the next major global financial crisis or for the next major collapse in stocks before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, catalyst, dollar, European banks, gold, higher yields, recession, turkey