Liquidity Could Be an Issue

It seems that with each passing day, more and more analysts are jumping on the bear bandwagon. There have already been numerous calls from well-respected firms highlighting the risks that the economy and stock market are facing, and some have even suggested that the next major downturn could be far more significant and longer than the last.

There are numerous potential issues that could drive the next major downturn: Higher interest rates, weakening stimulus effects, geopolitics and higher inflation to name a few. Regardless of what fuels the next downturn, liquidity is likely to become a major issue.

For those who recall the “flash crash” of 2010, the prospect of more frequent crashes is daunting. That crash saw the Dow Jones Industrial Average declined by about nine percent or nearly 1000 points in a matter of minutes. Although markets soon after staged a crazy rebound, much of the damage had been done.

Looking at the current state of global stocks, such instances could potentially increase in frequency due to a lack of liquidity. The stock market has gotten arguably frothy and once the selling starts, it could lead to a “fire sale” type of effect. This means that as the selling accelerates, more and more investors may look to exit the market at the same time, hitting the tape with massive amounts of sell orders. Needless to say, markets have a long way to potentially fall if the stock market (or perhaps when) starts to reverse course.

Market-making and trading operations could potentially suspend activities or look to sell into the chaos, possibly further exacerbating such a scenario. Such a scenario could potentially wipe out some, all, or even more than the gains some investors have seen in recent years. The point is: markets have a tendency to take the stairs up and the elevator down. Only in this case, there may not even be an elevator but simply a free-fall back down to significantly lower levels.

Although it is impossible to say when such events may begin to unfold, the risks for such events are undeniably on the rise. That is why it is imperative that investors begin to reallocate sooner rather than later.

One asset class that could potentially perform extremely well during such economic hardship is gold. This asset class is widely considered to be a reliable safe haven instrument, and prices could potentially see an enormous rise if stock markets get hammered once again.

Not only could the price of gold climb in dramatic fashion, but the metal could also potentially provide an important hedge against rising inflation, a weaker dollar and numerous other economic and geopolitical issues.

Now is not the time to be passive, but rather to be very proactive. 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 incorporate this key asset class using an IRA account.

Don’t wait for the next major stock market meltdown before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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