The gold market has been range-bound in recent weeks. Dips into recent support from $1275-$1290 have been aggressively bought thus far, and the market appears to be quite comfortable in its recent range. The bears have not been able to carve out a fresh leg lower, suggesting that prices may be at a near-term or perhaps even long-term bottom.
Since gold does not appear to want to go lower, it may simply be a matter of time before its starts moving higher again. Perhaps the bigger question is not whether the market will move up, but what may be the major catalyst for the next major bull market. The gold bulls seemingly have a lot to choose from given the current economic and geopolitical landscapes.
The economy is clearly showing signs of slowing.
Recent data for retail sales and factory output have declined. Not only that, but the key durable goods figures have also dropped, providing further evidence of the economy losing momentum. The ongoing U.S./China trade war will likely exacerbate recent economic weakness, and at some point, the Federal Reserve may be forced into action to try to prevent a full-blown recession.
The recent resignation of British Prime Minister Theresa May could add additional challenges to a geopolitical situation that is already quite messy. It seems increasingly likely that a no-deal Brexit could be in the cards. If a no-deal Brexit takes shape as the October 31st extension approaches, it could fuel a significant degree of risk aversion and send ripples through global financial markets.
The conflict with Iran is another potential powder keg that could have significant effects on the global economy. Although President Trump has suggested that he does not want war with Iran, the U.S. has definitely turned up the volume on tough rhetoric. At stake are oil supplies and even a potential nuclear threat if Iran is unwilling to make an agreement on its nuclear ambitions.
There is also still the potential threat posed by North Korea. After a long period of quiet, the nation recently conducted another missile test. President Trump seems confident that a long-term, denuclearization agreement can be reached with the country, although it appears that he is increasingly alone in his convictions on the matter.
The bottom line is this:
The current economic expansion is likely at or very close to the end, and the risks of recession are on the rise. Against the current economic backdrop are a variety of geopolitical factors that could also have significant effects on the global economy.
With stock markets likely at or near a long-term top, now may be the ideal time to add diversity with asset classes that have the potential to outperform during a recession or period of heightened volatility. With the potential for risk aversion, dollar weakness and a protracted global recession, there may be no better asset class to turn to than gold.
Adding this key asset class to your portfolio has never been easier. Simply pick up the phone and speak with an Advantage Gold account executive today. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation using an IRA account.
Don’t wait for the next major recession to topple stocks or for the dollar to lose more value. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: global economy, gold bulls, major catalysts, president trump, risk of recession, slowing economy, stock markets, threat