Over the weekend:
President Trump alluded to a breakdown in ongoing U.S./China trade negotiations. The U.S. is now set to impose further tariffs on $200 billion of Chinese goods, taking the current rate of 10 percent up to 25 percent.
Talks were scheduled to continue this week in Washington, although it is now unclear if scheduled meetings will take place. Markets are on edge over the news, as stocks had seemingly priced in a deal being done in the coming weeks.
Today, the benchmark Dow Jones Industrial Average declined by about 300 points. The CBOE’s fear gauge, the VIX, shot up by nearly 30 percent as investors scrambled for cover.
Today’s spike in volatility and corresponding equity sell-off could be just a small taste of what may be seen if a deal is not reached. If the globe’s first and second-largest economies continue to lock horns over trade, it could put a significant dent in the output and productivity of both nations. It could potentially even put one or both countries into recession.
Ongoing U.S./China trade negotiations are not the only major risk to investors. Conflicts with North Korea and Iran also have the potential to affect global markets. The effects of tax cuts and government spending are also likely to wear off in the months and quarters ahead. Stock valuations are already arguably high, and the market is near recent all-time highs.
It is unclear what the catalyst will be or when it will take hold, but stocks could be at or very near a long-term high. Today’s price action and volatility spike are a great example of how quickly equity markets can fall. Although today’s declines were fairly limited to about one percent, there is nothing to stop the market from going into free fall at this point. When it does, the only thing that may potentially keep a floor under prices is the Fed.
Given the amount and significance of current economic and geopolitical risks, now is the time to add diversity. Now is the time to build an allocation in an asset class that may not only outperform during a major market meltdown or bear market, but one that may also potentially provide a hedge against a weaker dollar and rising inflation. Now is the ideal time to build an allocation in gold.
Adding this key asset class to your portfolio has never been easier and perhaps never more important. Not only that, but recent declines have made current prices very attractive and a great potential value for the patient, long-term investor.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the key role this asset class may play in the years and decades ahead. 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 collapse in stocks before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, dow jones, geopolitical risks, global economy, global trade, recession risk, stock market volatility, tariffs, trade war, trump administration, vix index, volatility