At its most recent meeting on monetary policy, the Fed outdid many of even the most dovish expectations. The central bank essentially came out and said – without actually saying it – that trouble for stocks is ahead, and the next recession is approaching. All the Fed’s previous talk about further rate hikes in 2019 and the balance sheet run-off continuing on autopilot were completely wrong.
Although the central bank could potentially hike once more in 2020, such a move could be more of a face-saving action than a necessary one. For all practical purposes, the Fed’s so-called policy normalization and tightening cycle have ended with a whimper. And it’s not just a U.S. problem but rather a major global problem.
Central banks around the world are still carrying massive asset holdings on their balance sheets, and the fact is that the global economy is simply not strong enough to withstand further asset run-offs or higher rates.
With the sugar-high effects of U.S. tax cuts and government spending starting to drastically wear off, the argument could be made that growth in the U.S. economy has already peaked. The notion of slower growth is not just bad for the economy and corporate profits, either. A slower economy could also have a major effect on the national debt, which currently sits at a record high. Remember all the discussions of how higher growth would produce a national boom that would help pay down some of the debt it has been financed with?
The current state of the economy is fragile. The Fed knows this and has already totally shown its cards. The next major recession is coming and could arrive sooner than many had anticipated. Although the notion of ongoing low rates may keep a bit of a floor under stocks if the recession proves to be worse than the previous, it is only a matter of time before equities collapse once again.
Only this time around, the Fed does not have the tools it had in 2008/2009 to fight it.
The current economic and fiscal situation could be trouble for stocks and risk assets, and equity markets may be viewed as a ticking time bomb. The dollar stands to decline as well, and at some point, the Fed may have to cook up something new to combat what could turn into a major economic depression.
That makes right now the ideal time to start adding portfolio diversity with asset classes that may not only potentially outperform under such a scenario but that may also help preserve purchasing power as the dollar sinks. There may be no better asset class to turn to than physical gold.
Adding gold to your portfolio has never been easier and given the bleak outlook for stocks and the economy, it has never been more important. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and how this key asset class may play a vital role in the years and decades ahead. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation in this asset class using an IRA account.
Don’t wait for the next great recession to fuel massive declines in stocks and to weaken the dollar further. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: 401k gold, add gold to my ira, advantage gold, best way to buy gold, best way to invest in gold, buy gold, declining dollar, equity markets, Fed, fed rate hike, government spending, monetary policy, tax cuts