What is Oil Telling the Markets?

The last several weeks have seen renewed stock market volatility as investors contend with the ongoing trade war with China, rising rates and the highly anticipated midterm elections. The elections have now come and gone, however, the other factors remain a source of concern for investors.

With so many potential distractions, it is easy to see why recent price action in the oil market has not gotten too much attention. Although the market’s recent slide has been mentioned here or there, the recent declines could be a symptom of a much larger problem. Crude oil prices settled in bear market territory on Thursday, and further downside could be seen.

At first glance, lower oil prices might seem like a good thing. Lower crude could lead to lower prices at the pump, and more money in consumers’ pockets. With consumer confidence already as high as it is, however, one also has to question whether lower fuel prices would have any significant effects. Of course, the prices of crude and gasoline do not always move together, and initial looks can be deceiving.

The steep drop in oil could potentially be indicative of a large-scale global economic slowdown. The bear market in crude also comes at a time when concerns over the health of the Chinese economy continue to mount. China has seen some key data pieces on the decline, including GDP, and recent auto sales data came in much softer than the same time a year ago.

Investors must also consider how stock indexes are weighted, and how energy companies may be affected by lower crude. Falling oil could mean falling profits for many energy companies, and that can have a significant impact on the broader market.

Then there is also the declines that have been seen in copper in recent months. Like crude oil, copper is often viewed as a barometer of economic activity, and if it has any accuracy at all it does not paint a pretty picture of what may be ahead for the global economy.

Add what could be a long period of policy gridlock in Washington and you have a possible recipe for the next major recession.

Lower oil, lower copper, higher rates, trade wars and geopolitics all point to what could be a major slowdown or even recession. Whether it arrives next week, next month or even in the quarters ahead, the next major downturn could be swift and severe, and could even do more damage than the previous recession of 2008/2009.

That is why right now may be the ideal time to add diversification to your portfolio. Not just any asset class will do, however. The current environment of accelerating inflation, geopolitical risks and a long-term downtrend in the dollar all point to the best choice: Physical gold.

Adding gold to your portfolio has never been easier. Simply pick up the phone and speak with an Advantage Gold account executive today about the potential benefits of this key asset class and what role it may play in your investment strategy.

Our associates are here to answer any questions you may have, and can even show you how simple it is to build a significant allocation in this asset class using your IRA account.

Don’t wait for the next major stock market collapse or for the dollar to head lower before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

Tags: , , , , ,