There is certainly no shortage of complex issues plaguing global financial markets currently. The ongoing U.S./China trade war and recent unrest in Hong Kong have fueled a sharp rise in market volatility in recent sessions, and that volatility expansion could potentially be indicative of a long-term topping process in stocks. Has the next race to the bottom begun?
Global central banks appear willing to ride to the rescue once again, however, and could take significant measures to combat the accelerating global economic slowdown. The U.S. recently cut the Fed Funds rate by 25-basis points, and markets are pricing in another cut next month. Some are even betting on a 50-basis point cut next month following the recent selling pressure in equity markets.
The U.S. may end up taking rates back to zero and doing so in short order.
The Fed will not be the only central bank taking action, however, in what could end up being a race to the bottom in terms of rates. Mexico already cut rates for the first time in five years and the ECB is expected to unveil a potent batch of stimulus measures next month. Against the backdrop of ongoing easy-money policies, there is now some $15 trillion in sovereign debt with negative yields, and that figure could grow further.
Although the flow of easy cash may allow stocks to avoid a complete collapse, the central bank stimulus will eventually dry out. At some point, central banks will be forced to raise rates and reign in balance sheets as inflation increases. Markets have already shown their disdain for higher rates and QT, and the next tightening cycle could send stocks significantly lower.
In the meantime, gold stands to potentially benefit either way.
The ongoing era of ultra-low rates and even QE will take a bite out of currencies and make gold more attractive in the process. Once the era of stimulus comes to a halt, investors may also seek out the metal as they look for stock market alternatives.
As stocks show symptoms of a major breakdown and beg for central bank assistance, the gold market has already begun a major upside breakout. As market dynamics shift further, the gold market could potentially see a rapid return to all-time highs or even far beyond. The time to act is now.
Adding gold to a portfolio has never been easier, and perhaps never more important. Speak with an Advantage Gold account executive about the potential benefits of gold ownership and to learn more about the key role it may play as the era of easy money continues. 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 stock market collapse or for low rates and QE to create even more debt while destroying the dollar. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: central banks, economic slowdown, financial markets, global, gold ownership, race to the bottom, trade war, volatility rise