According to MarketWatch, the stock market could soon “careen down a dangerous slope of hope.”
Wait, what does that mean?
Analyst Mark Hulbert says stock market sentiment is shifting rapidly from extreme pessimism to extreme optimism. We’ve gone from aggressive bearishness to aggressive bullishness in just the space of six weeks.
This means the opposite can happen just as fast.
Either way, the markets could deliver plenty of heartburn ahead for investors trying to save their way to a secure retirement without riding a roller coaster. Market winds that blow this hard bring plenty of rough and volatile seas.
Morgan Stanley just downgraded their 2019 earnings forecast to just 1% EPS growth. Chief equity strategist Mike Wilson said “our earnings recession call is playing out even faster than we expected.”
That’s not good news for stocks.
Let’s hope things turn out better, but if not let’s get prepared.
Have you taken recession-proofing steps for your retirement plan?
One possible step is a Gold IRA with physical gold and silver coins and bars inside, helping you ride out irrational exuberance. There are many options to meet your needs.
$1,400-$1,500/OZ GOLD PRICES IN 2019?
Aberdeen Standard Investments says the gold market should continue to shine through 2019, as investors run to safety.
Aberdeen’s director of investment strategy, Maxwell Gold, says these seven factors bode well for higher gold prices soon:
1) Interest rates have peaked
2) Slower economic growth ahead
3) Rising risk of a global recession
4) U.S. dollar under pressure
5) Possible equity and/or bond market crash
6) Crushing levels of government debt, particularly in U.S.
“A lot of people wonder just how long the equity bull market can last. They are looking to gold as a defensive hedge,” Aberdeen said.
Aberdeen Investments thinks $1,400/oz gold prices are possible in 2019.
Frank Holmes, CEO of U.S. Global Investors is also keeping a close eye on interest rates, now that the Federal Reserve has backed off its plans to raise rates in 2019. “Any type of a drop in a rates, gold in a blink of an eye, is $1,500/oz.”
International brokerage firm Sucden Financial says growing investor fears could push gold prices above $1,350/oz soon.
PERTH MINT: GOLD DEMAND IS ON THE RISE
Gold demand is on the rise, according to the Perth Mint.
Jerry Hicks, Business Manager, says safe haven demand has been the primary driver. He thinks rising signs of global recession are giving retirement investors plenty to worry about.
“Gold is the perfect hedge against a recession because it is not correlated to any other assets,” said Hicks. “As risks rise, it’s time for investors to go back to basics.”
Central banks are also expected to add to their gold reserves. In its 2018 report, the World Gold Council said central banks bought more gold in 2018 than any of the previous 50 years.
“It’s hard to ignore gold as central banks see it as an important diversifier for their assets,” he said. “Gold has been a store of wealth before they invented the wheel.”
GOLD COMPARED TO KEY ASSET CLASSES OVER TIME
One of the most common questions we receive from clients is: how does gold compare over time to other major asset classes?
As you know, we often talk first in terms of diversification, which is probably the most important reason to own gold. Research shows that gold can reduce volatility for your retirement portfolio when big shocks happen.
But long term price performance is worth noting as well. (Just keep in mind that this information is for illustration only, and past performance is no indication of future results!)
According to GoldHub research, gold is useful both in periods of higher uncertainty and relative calm.
Gold prices have increased by an average of 10% per year since 1971, the year gold first began to trade freely. This followed the collapse of Bretton Woods.
GoldHub’s broad takeaway is: “Gold’s long-term returns have been comparable to stocks and higher than bonds or commodities.”
The research identifies a major reason behind gold’s price performance: “it trades in a large and liquid market, yet it is scarce.”
The World Gold Council reports that mine production has increased by an average of only 1.4% per year for the past 20 years! At the same time, higher demand has come from consumers, investors and central banks.
Global gold demand from India and China has grown from 25% in the early 1990s to over 50% today.
According to GoldHub research, “expansion of wealth is one of the most important drivers of gold demand over the long run. It has had a positive effect on jewelry, technology, and bar and coin demand – the latter in the form of long-term savings.”
Since 2010, central banks have been net buyers of gold. These major players are gradually expanding their reserves to gain additional diversification and safety.
MAKE A PLAN FOR SAFETY TODAY
Do your personal investment goals also include diversification and safety, as well as the potential for price appreciation?
The good news is, you still have time to prepare today and consider all the facts about gold.
I highly suggest you think about the role gold and silver could play for the safety of your IRA. A gold bullion backed IRA is of considerable comfort in these times of uncertainty.