The phrase “have your cake and eat it too” is commonly used to describe a situation in which people want the best of both worlds, or perhaps want to have two or more things that are incompatible. It can also be used to describe when people want more than what might be considered reasonable. The phrase simply alludes to the fact that you cannot have your cake and eat it too. Once you have eaten the cake, you can no longer have it. This is the type of situation that global markets may now find themselves in.
Politicians and investors want higher stock markets-heck everyone wants higher stock markets-but there comes a point at which an ascending stock market becomes difficult, if not impossible, to maintain.
The ongoing U.S./China trade war provides an excellent example of markets wanting to have their cake and eat it too. Everyone wants higher stocks and for stocks to continue their decade long ascent, a trade deal with China has to happen. It has already become abundantly clear how markets feel about the lack of a deal or further escalation of tensions. The problem, however, is that President Trump has made trade a primary issue for his administration, and he will be reluctant, if not totally closed-off, to making any type of deal that is not completely in the best interest of the U.S. The administration may now have to decide just how far they are willing to go to achieve that end, as stocks have already seen rising volatility and declines based on a lack of progress.
Markets also like lower interest rates and have become accustomed to ultra-low monetary policies around the globe over the last decade. As the U.S. Fed looked to normalize monetary policy in recent months, markets once again made their opinion crystal clear. The notion of further rate hikes fueled a significant upswing in volatility and selling, and the market now appears ready to crash if the Fed does not ride to the rescue with even lower rates and more monetary stimulus.
Although further easing from the Fed may keep stocks afloat, such action will also come with a price.
Ultra-low rates and QE will add to the national debt while also providing jet fuel for inflationary pressures down the road. Such measures will also have a very negative effect on the dollar and could fuel significant declines in the greenback, eroding the value of each unit of currency. The bottom line is that even with drastic measures intended to stave off a full-blown recession and stock market crash, the markets can’t have their cake and eat it too. Whether it’s a sharply lower dollar, hyperinflation or a major stock market collapse, at some point the piper will need to be paid.
That makes right now the ideal time to start diversifying with alternative asset classes that may potentially outperform as market dynamics shift. Given the potential for a major stock market collapse, a sharply weaker dollar and increasing sovereign debt levels, there may be no better asset class to look to than gold.
Gold not only has tremendous upside price potential but may also provide a solid hedge against a weaker dollar, rising inflation and other economic and geopolitical risks. Adding gold 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. 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.
The markets can’t have their cake and eat it too. Don’t wait for the next major stock market collapse or for a sharply lower dollar before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: dollar decline, fed easing, gold, inflationary pressure, low rates, rising volatility, tensions, trade war