The War on Rates

The stock market has had another trying week, as the Dow Jones Industrial Average dropped some 900 points in a span of just two days. There are certainly a number of headwinds currently at play, including the ongoing war on trade, a stronger dollar and various geopolitical issues. Without question, however, the primary catalyst for this week’s stock selling appears to be the notion of higher interest rates.

The Fed and its plans to normalize monetary policy have been the topic of significant debate in recent months. The central bank has already hikes rates a couple times this year, and is widely expected to hike once more before the end of the year. Not only that, but as of right now, the Fed has penciled in another three rate hikes for 2019.

It’s no secret that President Trump is not a fan of rising rates, and he has made his opinions on the matter well-known. The markets now also appear to be sending Jerome Powell and company a message that they are hiking too far too fast.

The Fed has already shrunk its balance sheet significantly this year, and seems determined to continue on its current course. While the central bank appears confident that the economy can handle higher rates, the markets are saying something different. This would seemingly make sense given the fact that the markets have enjoyed a decade of ultra-low rates and easy money.

What is currently being seen is likely a major re-pricing of assets given the higher cost of capital. If the current trend continues, stocks could potentially still have a long way to fall before finding a long-term bottom. Of course, the recent volatility and declines in equities could give the Fed reason to pause. The Fed has been trying to assert and maintain its independence in recent months, however, and could elect to stay the course as a matter of principle.

Either way, hard assets like gold could potentially find themselves in a win-win situation. If stocks keep moving lower, investors may seek out alternative asset classes and the perceived safety of gold. If the Fed decides to sit tight, or even lower rates again, the dollar could decline and gold could be in a position to run higher.

The time to take advantage of these market dynamics is now. Adding gold to your portfolio has never been easier than it is today, and current price levels may not be seen again as demand for the yellow metal increases.

Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and how it may play a key role in your portfolio. Our associates are here to answer any questions you may have, and can even show you ow simple it is to build a significant allocation in this key asset class using your IRA account.

Don’t wait for the next major wave of declines in stocks or for gold to take off without you before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.