Professional investment firms are taking a close look at gold and silver, given the recent spike in market volatility and grim economic forecasts.
Goldman Sachs has just issued a market alert this week saying the U.S. economy is due to slow. They are urging investors to diversify now.
Unfortunately, this call to action may have come too late.
2018’s market results have already been nothing short of devastating.
According to the Wall Street Journal, 90% of the 70 asset classes tracked by Deutsche Bank are on track to post negative returns in 2018… the worst we’ve seen since 1920!
That is why Goldman is saying this is no time to be complacent.
“At this stage of the business cycle, gold may be particularly appealing as a portfolio diversifier given that long-term bonds may be hurt if U.S inflation surprises to the upside.”
Goldman believes the U.S. dollar cannot maintain its recent uptrend.
“If U.S. growth slows down next year, as expected, gold would benefit from higher demand for defensive assets,” said the Goldman report.
The famed investment bank also expects that strong central bank buying will continue, providing support for stable or higher prices for the precious metal.
Goldman says the Federal Reserve will be forced to pull back on plans for aggressive interest rate hikes in 2019.
“The market has already priced in 10 out of the 12 [Federal Reserve] rate hikes that we expect,” Goldman said.
With physical gold demand, market volatility and economic uncertainty on the rise, diversifying with gold is a strategy many Americans are considering right now.
Goldman says current conditions “offer an extremely attractive entry point for longs in gold.”
Could it be the right time for you?
ANALYSTS: HIGHER GOLD PRICES AHEAD
Bernard Dahdah, precious metals analyst at Natixis, says “safe-haven demand will be a major driving factor for both gold and silver in 2019.”
The investment bank says gold prices could reach $1,350/oz in 2019.
Rising uncertainty coupled with a U.S. job market at full employment will mean slowing growth for America. Nataxis believes that the 2018 tax cuts have given all they can to the economy – including huge deficits!
With lower growth, higher volatility and ballooning deficits, higher interest rates might not be good for America.
Natixis is also bullish on physical silver prices, calling for them to rise as high as $18/oz in 2019.
KC Chang, senior economist at IHS Markit, sees gold prices trading at $1,300 an ounce in 2019. Chang said that there is enough global financial instability to keep a safe-haven bid in gold through 2019.
Chang also noted that a slowdown in the U.S. could put the brakes on U.S. interest-rate hikes and hurt the dollar, helping gold in 2019.
WHY IS THE MARKET OUTLOOK SO GRIM AMONG PROFESSIONAL ANALYSTS?
Analysts have recently sounded the alarm about all the red flags they see in the global stock markets today.
Especially the ones that make today look eerily like the overheated period just before the last big market crisis in 2008:
1. Housing has slowed
There has been a sharp rise in cash-out mortgage refinancing by homeowners, which leaves them dangerously vulnerable to market price drops and interest rate hikes. There was a similar surge shortly before the 2008 housing crash broke out that left many homeowners “upside down” with nowhere to go but foreclosure.
2. Oil prices have dropped
While the expansion of the U.S. oil industry has boosted the domestic economy in 2018, the recent drop in oil prices could ripple into slashed hiring and investment in oil-producing states like North Dakota and Texas. Why is oil dropping? Read on to #3…
3. Global economy is flagging
A recent survey of economists found that they expect U.S. economic output to drop by 30% in the current quarter vs the previous two. General Motors just announced plans to cut 15,000 jobs in the U.S. The same is true overseas: China, Germany and Japan are all reporting slowing economic output.
4. Investors are skittish
Equity markets are down sharply and bond investors are driving up yields for higher risk corporate debt.
5. Inflation is on the rise
October unemployment was the lowest since 1969! Wage competition for qualified workers could drive up costs for companies quickly, which leads to price hikes for everyday products and services.
SOMETHING TO CONSIDER, BEFORE IT IS TOO LATE
The above information should give any retirement investor plenty to think about… especially if retirement isn’t all that far away.
Could your lifestyle afford a major market dip or sudden jump in inflation?
It could be the perfect time to consider your options to add safe-haven assets to your portfolio.