The ongoing U.S./China trade war has had a significant impact on the economies of both countries. The war on trade has seen several stages of escalation in recent months, and thus far, the two aides still appear to be quite far apart when it comes to making some type of long-term agreement. Talks are set to resume next month, and that news has stock markets moving higher as risk aversion abates.
Some key economic indicators have already begun showing some significant cracks. Recent manufacturing data, for example, was disappointing and could potentially point to an accelerating economic slowdown. Although optimism for a trade deal has risen in recent weeks, the ongoing lack of an agreement could keep any stock upside limited.
There is still the possibility that we will go without a deal, for the time being.
What if China simply decides to try to wait-out President Trump going into the 2020 election? Trump has in many ways bet his reelection on a strong economy, and if it starts to sputter further, he could potentially have an increasingly challenging campaign. If Trump loses the reelection, markets are likely to fall through the floor. On the other hand, if the trade stalemate continues, the economy could be pushed into recession regardless.
The only way to keep the economy going at this point may be for aggressive central bank action. Ultra-low rates-perhaps back at zero-and even a fresh round of QE may keep stocks and the economy going for a while. The higher stocks climb, however, the more they will eventually fall. As the era of easy money continues, inflationary pressures will eventually take root and begin to build rapidly. The result could be a major stock market crash, a sharply weaker dollar and a Fed that has little other ammunition at its disposal.
The numerous economic and geopolitical issues currently being faced by markets are not going to go away anytime soon.
Whether its ongoing weakness in Europe, a messy Brexit or a continuation of the war on trade, the markets may be vulnerable to a sharp rise in volatility and significant risk aversion. Once the selling in stocks gets going, there may be little the Fed or anyone else can do to stop it.
With so many potential risks to the economy and global financial markets, now may be the ideal time to diversify with alternative asset classes. Given the potential for lower rates, inflation and a weaker dollar, there may be no better asset class to look to than gold.
Gold not only has unlimited upside potential but may also potentially provide a key hedge against rising inflation, a weaker dollar and lower stocks. As the next major bear market in stocks approaches and as the economy starts to contract, the time to add diversity is now. 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.
Don’t wait for the next major stock market crash or for a sharply lower dollar and hyperinflation to take root before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: brexit, central bank action, china, inflationary pressure, low rates, stalemate, trade war