Recent pieces of key economic data have not painted a rosy picture. ISM manufacturing and services data have both shown significant declines, and the global financial market is now getting increasingly worried about the prospects for a recession in the U.S.
Markets are now pricing in another Fed rate cut this month, and the central bank could even allude to further cuts if the data does not rebound.
Although the risks of recession do appear to be on the rise, the next major recession could be further off than some anticipate. The Fed and other global central banks will do what they can to combat the ongoing slowdown, including cutting rates further and even implementing fresh QE if necessary.
Sometimes, perception matters most and recent action in the financial markets suggests investors are getting increasingly skittish. Whether a recession arrives this year, next year, or a couple years down the road, the concern over negative growth may keep certain asset classes on the offensive. The gold market has already seen buying on significant dips, and the current uptrend may be set to continue.
There are numerous factors that could fuel a rise back to all-time highs and beyond for gold, and such a move could be swift and severe.
Below are four very basic, yet powerful, fundamental factors that will likely keep the yellow metal moving higher:
- Increasing inflows: As worries over the next great recession accelerate, the gold market is likely to see increasing inflows.
- Central bank purchases: There are numerous areas of geopolitical unease in the global marketplace. These tensions could lead to further central bank purchases. Several nations, including Russia, China and Turkey could look to add to their reserves.
- A weaker dollar: The dollar could see significant weakness based on two issues. First, an increasingly dovish Fed could continue to cut rates and ease policy. Second, if there is a rebound to global growth, the dollar could stand to weaken versus other major currencies.
- Inflation: As the era of easy money continues, inflation will eventually accelerate. This will make everything more expensive and even erode net returns.
The current economic and geopolitical landscape not only makes gold a prudent investment, but it could be argued that it makes a significant allocation in gold a necessity.
Adding this key asset class to your portfolio has never been easier, and perhaps never more important. Pick up the phone and speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the key 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 stock market collapse or for gold prices to hit new all-time highs before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: central bank purchases, china, Fed rate cut, inflation, next recession, qe, russia, turkey, weaker dollar