Stocks In Bubble Territory

Much has been said about the elevated levels of the US stock markets in recent months. Stocks have glided effortlessly to new all-time highs even as economic troubles persist and the global economy shows signs of weakness. The Fed’s loose monetary policy combined with other central bank stimulus measures have clearly been the key drivers of lofty equity prices. This makes perfect sense. After all, the Fed held interest rates at zero for over a decade while pumping billions of dollars into the economy through its bond-buying program. The reality is that, in the absence of any interest to be earned, investors have little choice but to buy stocks in the hopes of keeping up with inflation.

This has led investors young and old to be “long” the equities market for some time. Retirees, who may rely on interest income, have had to take more risk in order to earn any possible return on their money as they search for yield that is necessary to maintain their style of living in retirement.

The lack of options has driven stocks higher, and one could argue that stocks are now firmly in “bubble” territory…

We all know what eventually happens to bubbles…

After being non-existent for many years, inflation has come roaring back to life with a vengeance. Price pressures are at 40-year highs. This has affected every asset class, from housing to autos to fuel to a loaf of bread.

The longer an era of easy money persists, the greater the risk of runaway inflation. The U.S. and other parts of the world are seeing that firsthand right now. 

The Fed Is Set To Raise Rates

The global financial system is still awash in money, and the pumping continues! This large supply of money will further erode the value of each unit of currency. It’s simply inevitable. As each unit of currency loses purchasing power, everyday goods and services become more expensive and the inflation cycle begins or accelerates.

As stocks hover around all-time highs and more uncertainty creeps into the bond market, gold and other precious metals may see additional buying interest.

In order to preserve its credibility, the Fed will likely raise rates further this year. As rates go up, stocks and bonds will become less attractive and investors will be looking for alternatives.

Given current equity levels and recent bond prices, the gold market should be considered “cheap” right now and could present an excellent buying opportunity for the long-term investor.

Would you rather be buying an asset that has run up to new all-time highs on the artificial stimulus or an asset that has pulled back and is now on sale?

Unlike the stock market, gold is not driven by QE or central banks. Gold is gold. It derives its value from its scarcity, history and reputation.

It cannot “pop,” default, or go bankrupt…

The Bottom Line

We believe that gold presents an excellent buying opportunity right now…

Gold is off its all-time highs, a level we expect to be eclipsed in time, and can be effectively purchased right now at a steep discount.

Or you can keep chasing returns in the equity bubble until the bubble bursts. The choice is yours…

Astute investors are already positioning themselves in gold, silver, and other precious metals. They see the writing on the wall and know what is in store for stock investors. Shouldn’t you?

If you are interested in adding wealth-protecting assets to your portfolio assets that may protect you from the coming equity bubble and dollar collapse-then consider gold and precious metals while they are on sale.

One of the simplest ways to gain exposure to these critical precious metals is through a precious metals IRA. Getting started with a gold IRA is easy. Our experienced executives are here to guide you, step by step, through the entire process.

Talk to an IRA advisor about how to roll over your 401(k) into a Gold IRA by opening a self-directed IRA account, contact us or call us at 800-341-8584 today.