Is a significant dollar decline in the future? Over the weekend, Fed Chairman Jerome Powell was interviewed by CBS’ “60 Minutes” and discussed a range of topics. The Fed chief has been widely criticized by U.S. President Donald Trump (who appointed Powell) in recent months over the central bank’s plans to normalize monetary policy through interest rate hikes.
Under Powell, the Fed raised interest rates four times in 2018 and could look to hike them further in the months ahead. The central bank began the tightening process under then-Chairwoman Janet Yellen in 2015. From that time until the early stages of 2019, the U.S. has seen its best economic gains during the recovery which began a decade ago. U.S. GDP rose by nearly 3 percent last year – certainly a noteworthy accomplishment – although most analysts have suggested that the economy will begin to cool further in the years ahead.
And that is what makes the Fed’s position so very important: If the Fed takes a more-hawkish approach to policy, it could potentially put the brakes on an economic expansion and stock market rally that has spanned a decade now. If the central bank falls behind the inflation curve, however, it risks significant price increases and the potential for rapid or larger increases to the Fed Funds rate later that could send markets into a tailspin.
For now, the Fed appears ready to stand on the sidelines, a notion that Powell reiterated during his recent interview.
Although stock market investors may consider a wait-and-see Fed bullish for stocks, the markets may actually face a far more significant problem as the global slowdown accelerates. Namely, the central bank has far less ammunition to fight a major economic deceleration than it did when the Great Recession of 2008/2009 hit. At that time, the Fed was able to rapidly lower the Fed Funds rate from 5.25% down to zero. With a current Fed Funds rate of just 2.25%-2.50%, the central bank may not be able to create the same “shock and awe” effect it did previously.
With its primary tool of interest rates having far less bang for the buck, the Fed could look to alternative stimulus methods again to fight a major slowdown. Such a move could potentially have a significant impact on the dollar and could fuel a rally in hard, dollar-denominated assets like gold.
The outlook for dollar-denominated asset classes may be highly bullish regardless. Not only will the Fed likely have to lower rates and begin QE measures again, but the U.S. is also grappling with a debt problem that could potentially lead to a massive currency debasement at some point. As the currency sinks, so does the purchasing power of each dollar in circulation and therefore your purchasing power.
That makes now the time to start acquiring assets that may potentially outperform during a significant dollar decline. Given the current economic and geopolitical backdrop as well as the tendency for paper currencies to lose value, there may be no better asset class to look to than the only true form of money left: physical gold.
Adding this key asset class to your portfolio has never been easier and perhaps never more important. Simply pick up the phone and 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 build a significant allocation in this key asset class using an IRA account.
Don’t wait for the next major stock market or dollar collapse before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.