The highly anticipated meeting between U.S. President Donald Trump and Chinese President Xi Jinping took place over the weekend at the G20 meetings in Argentina. The two leaders had an opportunity to discuss trade and a range of issues, and reportedly came to an important agreement. The two nations effectively called a cease-fire over further tariffs that were set to be initiated on January 1st, 2019.
The agreement was certainly progress considering little headway has been made in recent months. Whether the two countries can hammer out a long-term, mutually beneficial agreement remains to be seen.
Markets took the news in stride, however, as the Dow Jones Industrial Average rose by nearly 400 points at its high and crude oil climbed by almost four percent. The gold market also saw a sharp rise, with prices moving higher by nearly $14 per-ounce.
As the trading session has progressed, however, stocks have seen their early gains cut in half. The potential for an agreement could lead to increasing volatility in the weeks ahead, and if no agreement is reached stocks could come under severe pressure.
While stocks may have to contend with the ongoing trade negotiations, the gold market looks poised for further upside either way. The dollar index saw some weakness today as investors digested this weekend’s developments, and the currency could see further pressure if a deal gets closer as it loses its safe-haven appeal. Against this backdrop, an increasingly dovish-Fed may also keep buyers interested in hard assets. The Fed’s commentary last week was viewed by many analysts as being decidedly more dovish, and the central bank could take a far less-aggressive policy towards tightening than previously anticipated.
Although stocks may see an ongoing relief rally on the news and the Fed, the market still has much to prove. The “buy the dips” mentality that has worked so well for years now is no longer working, and any major rallies in equities could run into heavy selling pressure.
A significant asset rotation is already underway, and leery investors may continue to shy away from risk assets as there is an increasing amount if unknowns in the marketplace. With the potential for stocks and the dollar to continue lower, now may be the ideal time to add diversity with hard assets that may potentially increase in value during an equity bear market or recession.
Gold is currently knocking on the door of resistance in the $1245 to $1250 area, and if breached, could see a sharp and significant upside rally. Such a rally could be the beginning stages of the next major bull market, just as stocks enter into what could be a protracted bear market.
Don’t be fooled by short-term stock rallies or the idea of fresh all-time highs. A market top in stocks has likely already been reached, and now is the time to build a significant allocation in alternative assets that may potentially outperform during the next major downturn.
Due to its upside potential, its ability to hedge inflation and its negative correlation to the dollar, gold may be the ideal asset class to build around in the current environment.
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 build a significant allocation in this key asset class using your IRA account.
Don’t wait for the next major stock market collapse or for a weaker dollar to erode your purchasing power. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, china, dollar index, Fed, G20, gold, trade war