This week, investors have gotten the latest FOMC meeting minutes and have also been hearing Congressional testimony from Fed Chief Jerome Powell. Stocks are making record highs as Powell’s commentary has been deemed to be dovish. Markets are now expecting a rate cut this month and even additional rate cuts in the months ahead.
The gold market is likely to remain on the offensive with or without higher stocks.
An environment of falling interest rates and lower yields could force an increasing number of investors to turn to the yellow metal as a store of wealth and value.
The ongoing U.S./China trade war is having a significant impact on the economies of both countries and there does not appear to be an agreement in sight. U.S. trade policy may play a key role in the health of the economy in the months and years ahead, and the situation could potentially get worse before it gets better. The trade war could even put both countries into recession if tariffs are increased further or other extreme action is taken.
Although stocks are making fresh highs on the notion of rate cuts, the decade-long rally is getting long in the tooth. In fact, one could make the argument that the only thing keeping equities moving higher is the idea of a Fed rescue. The problem this time around, however, is the fact that the Fed doesn’t have a lot of room to cut. Taking rates from 2.25% to 2.50% to zero may not have the desired effect, and the Fed could be forced to start printing money once again. This could lead to a sharply lower dollar index.
An ongoing period of ultra-low rates and possibly even more QE will eventually lead to issues.
Not only could the value of the dollar take a sharp dive, but inflation could pick up and get out of control rapidly. Once the Fed decides enough is enough and takes a more hawkish stance, stocks could tank and markets could see declines of 30, 40, even 50 percent or more.
The gold market seems to have found itself in the ideal scenario. The prospects for a sharply weaker dollar, a global recession, a stock market crash and runaway inflation could keep the metal moving higher.
Against the current backdrop of a global slowdown and numerous geopolitical risks, investors have already begun to diversify away from stocks. The rally seen in gold the last several weeks looks to be the beginning stages of what could be the next major bull market. With prices maintaining trade over $1400 per-ounce, it may not be long until the market tests previous all-time highs near $2000 per-ounce and beyond.
Adding this key asset class to your portfolio has never been easier and perhaps never more important. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the role it may play going forward. 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 or for stocks to collapse before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: geopolitical risks, global recession, hawkish stance, ideal gold market, lower dollar index, metal moving, printing money, runaway inflation, store of wealth, trade war