The gold market has shown some significant upside in recent months, and with good reason. There are a variety of issues currently working in gold’s favor, and a strong fundamental and technical backdrop could keep the metal on the offensive. Regardless of whether the Fed cuts rates further or how much, the current state of the global economy and geopolitical landscape could be supportive for the metal and other hard assets.
Here are three issues that may make now the ideal time to build a significant allocation in gold:
- The slowing global economy: The global slowdown appears to be gaining steam, and recent data would seem to confirm. The latest data out of Germany, for example, showed the weakest manufacturing sector in a decade. As the economic engine of the EU, any weakness from Germany is likely to have a major effect on the rest of the region. Of course, China, the U.S. and other nations are also showing some key symptoms of weakness. As the current expansion gets older and older, the trend towards weakness may continue.
- The era of easy money is set to continue: The Fed has already been forced to cut rates twice in a matter of months to combat the current slowdown. The latest tightening cycle only brought rates back to 2.25%-2.50% and now the Fed Funds rate is at 1.75%-2%. The Fed may need to bring rates back to zero, and other nations are likely in a similar boat. Not only could central banks see fit to cut rates to zero, but more regions may go negative and fresh QE measures may be implemented.
- The dollar will weaken: As countries cut rates or even start printing money again, currency values may decline. This could create a race to the bottom, as countries look to weaken their currency as much as possible to keep exports and markets competitive. As the era of easy money continues, the longer it is maintained the higher the risk of significant inflation down the road. A weaker dollar buys less goods and services and makes everything more expensive. Not only that, but a weaker dollar can even erode the value of investment returns.
There are numerous other issues that could be listed as bullish catalysts.
Uncertainty over the 2020 Presidential election, Brexit, unrest in Hong Kong and tensions in the Middle East to name a few. The current economic and geopolitical landscape is fraught with potential landmines, and the next major global recession is likely to hit sooner rather than later. That makes now the ideal time to diversify with hard assets. With its unlimited upside potential, ability to hedge against inflation and a weaker dollar and its overall reliability, there may be no better asset class to look to than gold.
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 recession or geopolitical crisis to fuel a major stock market collapse before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: bullish catalysts, easy money, geopolitical landscape, glaboal economy, manufacturing sector, rate cuts, tightening cycle