The gold market has been showing some important signs of strength in recent action. The market has moved sharply higher in a short period of time, and is hovering around a 10 week high. Overall sentiment around the gold market seems to be improving and the market is also now on more sound technical footing.
Of particular note today is the fact that gold is higher again despite stocks being sharply higher as well. Stocks are not just slightly higher, either. As of this post, the Dow Jones Industrial Average is up by almost 400 points. Although it is not yet clear if the rally today is simply a relief rally or if stocks will turn higher once again, the gold bulls do not seem to care at this point.
Given the current economic and geopolitical backdrop, this is really not all that surprising. Stocks could very well have already put in a top, and markets do not typically go straight up or straight down. If a top has not yet been reached, it then begs the question of just how much equities could possibly have left in the tank. Regardless of what stocks do or don’t do, there is also some trouble brewing in the background.
Investors may not finally be getting the message that things are not as rosy as they seem. The stock market has thus far been able to mostly shrug off the current storm of economic and geopolitical issues, but it may not be able to do so for much longer. Higher yields have already shown a highly bearish effect on equities and the rise in rates is likely not over. If stock investors feel the need to sell when the ten-year note hits 3.25%, imagine how quickly they may look to exit if the yield stats approaching four percent.
Higher yields are not the only cause for concern. The current rift between the U.S. and Saudi Arabia has the potential to trigger a massive move higher in crude oil prices. Oil at $100 per barrel is not sustainable, and could cause a significant decline in economic output all over the globe. If oil were to climb to $200, $300 or even $400 per barrel, the effects would be economically crippling.
Then there is also the ongoing war on trade. Although the trade war has been quiet lately, it appears set to escalate further and will eventually do considerable economic damage.
Any way you slice it, the economy could be headed for tougher times and now might be the ideal time to start planning for the next major recession. Looking at the way gold has been trading lately, it would seem that many investors already have.
Adding this key asset class to your portfolio has never been easier and it may be the perfect asset class to diversify with during the next downturn. Gold not only has tremendous upside appreciation potential, but it may also provide a key hedge against increasing inflation and a weaker dollar.
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 simple it is to build an allocation using your IRA account.
Don’t wait for the next major stock market crash or for the next major recession to take hold before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, gold, higher yields, interest rates, saudi arabia, stock market collapse