As the year comes to a close, there is no better time to begin thinking about and planning for next year. Significant changes in the global economy and market dynamics necessitate that investors take an objective look at their portfolios to determine how to try to stay a step ahead. Given the current economic and geopolitical backdrop, there as perhaps never been a more important time to have a significant allocation in hard, physical assets like gold. If you are thinking about making some changes or want to see just how significant a role this asset class may play in the years ahead, consider a few of the issues outlined below.
The dollar index has enjoyed some significant tailwinds this past year in the form of tax cuts and government spending. The effects of these measures have, however, begun to fade. Although tax cuts may be beneficial to the economy and may increase consumer spending, they do come with a steep price tag in the form of mounting deficits. As the deficit grows and as the cost of servicing the deficit increases with higher interest rates, the dollar is likely to again reverse course and resume its long-term downtrend. As the dollar weakens, so does your purchasing power and net returns.
The economy has without question had a terrific run in recent years. GDP has been north of 3% and employment has reached levels considered to be “full.” The economy runs in cycles, however, and the current cycle of expansion appears to be running on fumes. The economy has enjoyed the benefits of ultra-low rates and massive money printing for the better part of a decade, but the punchbowl is being taken away. Interest rates are on the rise and central banks have wound down or are winding down their QE programs. It is highly questionable whether the economy can stand on its own two feet and the notion of higher rates has already fueled significant stock market declines and volatility. The bottom line: the next major recession is likely approaching and when it takes hold stocks are likely to see sharp declines along with the household wealth of millions.
The current geopolitical landscape is fraught with potential landmines that could have dramatic effects on global financial markets. In the U.S., a democratically-controlled House may make it difficult, if not impossible, for the Trump administration to continue to implement its agenda. The ongoing trade war with China is also having a measurable effect on both countries and thus far there does not appear to be a viable deal on the table. There is also the ongoing saga of “Brexit” which could have a ripple effect through global markets. Then there is also the potential for a significant global economic slowdown, which already appears to be taking hold in key markets such as China. The numerous headwinds faced by the global economy and global markets could fuel significant risk aversion and headline risk also has the potential to send markets sharply lower on a whim.
Taking these three major issues into account, now may be the ideal time to add much-needed diversification with asset classes that might potentially provide a hedge against rising inflation, a weaker dollar and a global recession. Of all the asset classes available to investors, physical gold may be the best choice. Not only does gold have significant upside price potential, but it may also act as a hedge against inflation and declining purchasing power. For these reasons, it stands to reason that a significant allocation in this asset class is warranted.
Adding gold to your portfolio has never been easier and perhaps never more important. As the New Year approaches, take the time to speak with an Advantage Gold account executive about the potential benefits of gold ownership and the role this key asset class may play in your portfolio in the years ahead. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation in gold using your IRA account.
Don’t wait for the next major recession to take hold or for the next major stock market collapse to erase billions in investor value. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, brexit, business cycle, dollar index, geopolitics, global recession, gold, planning, trump administration