The last few days have shown what can happen as investors get nervous and even start to panic. Yesterday’s declines in equity markets, which were over 3 percent, were the largest drop so far this year and showed just how seriously investors are taking the ongoing U.S./China trade war. the case for gold has never been stronger.
As President Trump implements additional 10 percent tariffs on another $300 billion of Chinese goods, China has responded by devaluing its currency. The yuan moved past the key 7 per-dollar level yesterday as it traded at the lowest level in over a decade. The trade war, it seems, could become a currency war.
The U.S. may have no option but to respond further and could look to weaken the dollar through monetary action. A series of rate cuts could send the greenback lower, while a fresh round of QE could also devalue the currency.
As this ongoing trade/currency war escalates further, currency values could see a race to the bottom.
Not only that, but the risk of a global recession will rise substantially, and equity markets could see hefty declines from recent all-time highs.
Against the backdrop of a global recession, falling currency values and other geopolitical risks, investors are likely to flock to what they perceive to be the safest bet out there. Recent market activity would seem to suggest that investors like gold in this scenario and the market could have significant upside potential from current levels. In fact, gold is already trading at a fresh 6-year high and could be setting its sights on previous all-time highs around $2000 per-ounce in the months ahead.
Recent actions by China and the U.S. could be just the tip of the iceberg. Any further escalation could set the stage for a massive decline in equity markets that could see stocks fall by 50 percent or more. There may be little, if anything, that central banks can do to combat the next major recession, and world markets could see a long period of negative returns as the global financial bubble bursts.
The recent run higher in gold and meltdown in stocks could be just the beginning.
Now is the time to add diversity with alternative asset classes that may potentially outperform as the global recession gathers steam. Not only does gold come with tremendous upside potential, but it may also provide an important hedge against a falling dollar, lower stocks and rising inflation.
Adding this key asset class to your portfolio has never been easier, and never more important. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the role it 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 stock market collapse or for the dollar to sink further. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: 6 year high, chinese yuan, currency devaluation, currency war, equity markets, gold, tarrifs