As the year winds down, and as trading volumes decline, many key markets are likely right at or near levels where they will finish out 2016. Although stocks have had a great several weeks, other asset classes, such as gold and silver, have not performed as well. Although risk assets have been moving higher on the notion of increased spending and tax cuts, much remains to be seen that could determine how markets might perform in the New Year.
We believe that gold and silver could potentially have a stellar 2017, and although we could cite numerous reasons that these markets could potentially rally significantly in the next 12 months, here are three simple issues that could potentially put the shine back into these key precious metals in 2017:
- Lack of delivery: Stock markets have been on a significant run higher on the idea of lower taxes, increased infrastructure spending and other potential changes to economic policy. At this point, however, none of these things have been put into action. Although a Trump administration could potentially deliver on many of its campaign promises, there is also the potential for a lack of delivery on some of the key issues discussed. Once investors start seeing what he actually does and does not get accomplished, they may feel quite differently about stocks and risk assets and could potentially look for diversification opportunities.
- Interest Rates: The Fed just recently raised the Fed Funds rate for the first time in a year, and for only the second time in a decade. The Fed’s most recent dot-plot now shows three interest rate hikes next year rather than just two that were expected by markets. The idea of rising rates has likely been a heavy weight on gold prices, but it is important to keep the idea of rising rates in perspective. For starters, it was not long ago that four interest rate hikes were expected in 2016, and the central bank only managed to hike rates one time. Just because three hikes are now being called for next year does not necessarily mean that three hikes will take place. Either way, interest rates are likely to remain depressed for some time to come.
- Rising Inflation: If the Trump administration does in fact begin to implement many of the policies discussed on the campaign trail, inflation could potentially take a rapid and significant turn higher. If billions are pledged to increase infrastructure spending, investors could potentially demand higher yields on the debt. An environment of rising inflationary pressures could potentially fuel buying in asset classes that may potentially be viewed as a hedge against inflation.
Let’s also not forget some of the other factors that could take gold and silver sharply higher in 2017 such as:
- Possible trade wars
- Geopolitical issues
- Stock market crash
- Economic recession
As this year comes to a close and the New Year gets ready to take over, now is the ideal time to consider alternative investments and ways to add diversification to your portfolio.
In our view, physical gold and silver are the ideal solution and could potentially increase sharply in value in 2017 while also potentially providing a meaningful hedge against a number of possible issues that the global economy may face in the New Year.
Adding these assets to your holdings has never been easier.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold and silver ownership. Our precious metals professionals are happy to answer any questions you may have about investing in physical precious metals, and can even show you how to buy and hold physical gold and silver using your IRA account.
Don’t wait for stocks to crash or for inflation to take a bite out of your holdings. Explore your options for physical gold and silver ownership today. Don’t let the opportunity to buy gold and silver near current levels pass you by. Call us today at 1-800-341-8584 to get started.Tags: advantage gold, fiscal policy, gold, inflation, infrastructure spending, interest rate hike, trump