It’s no secret that the global economy has been slowing. The ongoing U.S./China trade war is dragging on the globe’s first and second-largest economies and there currently does not appear to be an agreement in the making. The current economic expansion is getting quite long in the tooth, and the effects of tax cuts and government spending are likely to fade in the months ahead.
Some analysts have already begun sounding the alarm bells about the next recession, which could come sooner than many anticipate.
The next major recession could not only be seen this year or next, but it also has the potential to be deeper and more challenging than the last. That makes now the ideal time to take action before the economy contracts. Here are three reasons that gold should shine once the recession takes hold:
- The Fed will have no choice but to start cutting rates again. Not only that, but with rates still at low levels, the central bank will likely also need to start printing money again in the form of QE. This could have a major impact on the dollar which has remained stubbornly strong. Investors may look to purchase asset classes that may provide a hedge against a falling dollar and corresponding decline in purchasing power.
- Investors will be looking for viable alternatives as equity markets sink. The stock market has been moving higher for a decade now and could have a very long way to fall once the economy starts contracting. As investors leave stocks in droves, they will be looking to put capital to work in alternative asset classes that may provide a return. Gold will likely be at the top of the list.
- Investors may seek out perceived safe haven assets. As the next recession takes hold, it may simply be one more headwind faced by global investors. The current geopolitical landscape is fragile to say the least and combined with an economic recession could force investors to park capital in what they view as safe haven instruments.
As the next recession takes hold, investors could be caught off-guard.
This could lead to a significant exit from equities and risk assets and a swift move of capital into gold. Needless to say, this has the potential to drive a rapid and sharp move higher in the price of gold, and investors who act late could be forced to chase the market higher.
Now may be the ideal time to start building a significant allocation in gold before the recession hits. With stocks still near all-time highs and gold off its previous all-time highs by around 40 percent, the metal could provide a far more desirable risk/reward scenario.
Adding gold to your portfolio has never been easier. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have and can even show you how to build a sizable allocation in this key asset class using an IRA account.
Don’t wait for the next recession to hit or for stocks to crumble again before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: asset classes, economic contraction, global investors, gold, next recession, printing money, safe haven assets, trade war escalation