“Gold will likely continue to act as an investment haven as the US economy faces further economic headwinds.”
…Sucden Financial, Feb 2019
Morgan Stanley is forecasting a rude awakening for the stock market as corporate earnings dry up fast.
The global investment bank just cut its 2019 S&P 500 EPS growth target from 4.3% to only 1%, warning that recession is looming.
Big earnings have been fuel in the fire of big stock market gains in recent years. But that is screeching to a halt even faster than the big banks forecasted.
Mike Wilson, Morgan Stanley’s chief equity strategist, says “Our earnings recession call is playing out even faster than we expected. When we made our call for a greater than 50% chance of an earnings recession this year, we thought it might take a bit longer for the evidence to build.”
Morgan Stanley is telling investors to fasten their seatbelts. “If current estimates move in line with history, we could see a full year decline of about 3.5% in S&P earnings,” said Wilson.
Increased volatility in the stock market has been painful for investors nearing retirement. The possibility of large scale declines is an even more scary notion.
This is why we recommend considering physical gold and silver in your IRA before the next big decline hits.
Have you considered your own diversification plan?
$1,500/OZ GOLD IN 2019?
Frank Holmes, CEO of U.S. Global Investors is 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.” Differentials between currencies like the dollar, the yen and others versus gold makes the precious metal very attractive at current levels, says the veteran investor.
International brokerage firm Sucden Financial says growing investor fears could push gold prices to $1,350/oz soon.
“Fear-buying will remain a prevalent investment strategy,” the analysts said. “Gold will likely continue to act as an investment haven as the US economy faces further economic headwinds.”
The French firm noted that concerns regarding slowing global economic growth are outweighing disappointing inflation pressures. Sucden said that the potential for a global debt crisis could drive gold prices and demand higher.
“The US has [$1 trillion] to refinance in 2019 and China is flooded with property and local-government debts,” Sucden said.
Will Rhind, CEO of GraniteShares, agrees that investors are seeking alternative assetsas global financial market volatility and economic uncertainty rises.
“We are nearing the end of the business cycle and we can expect to see lower economic growth and that will be an important driver for gold. Investors are looking to protect their portfolios in an environment of low growth and the potential of further disappointment in equity performance,” he said.
THE CASE FOR GOLD REMAINS STRONG IN 2019
A recent comprehensive data study by GoldHub, the research arm of the World Gold Council, found that gold held its own as a safe haven asset:
- Source of long-term returns
- Diversifier that can mitigate losses in times of market stress
- Liquid asset with no credit risk that has outperformed fiat currencies
- Means to enhance overall portfolio performance
The data analysis showed what precious metals investors have long known: adding 2%, 5% or 10% in gold over the past decade to the average pension fund portfolio would have resulted in higher risk-adjusted returns.
Gold is going mainstream! Since 2001, investment demand for gold worldwide has grown, on average, 15% per year. According to GoldHub, it has delivered returns while reducing losses and providing liquidity to meet liabilities in times of market stress.
Here are 10 great statistical facts about gold in 2019 to think about, according to GoldHub:
- Gold has delivered positive returns over the long run, outperforming many key asset classes
- Since 2010, central banks have been net buyers of gold in order to expand their foreign reserves as a means of diversification and safety
- Gold has historically rallied in periods of high inflation
- Gold has outperformed all major fiat currencies over time. By contrast, fiat money can be printed in unlimited quantities to support monetary policies
- Gold’s correlation with stocks helps portfolio diversification in good and bad economic times
- Gold increased the risk-adjusted returns of a hypothetical average pension fund portfolio
- The supply of gold is balanced, deep and broad, helping to quell uncertainty and volatility because gold is not consumed like typical commodities
- Gold is used for many purposes and purchased all around the world, reducing its correlation to other assets
- Gold is both a luxury good and an investment, resulting in more effective downside portfolio protection.
- Gold returns have outpaced the US consumer price index (CPI) over the long run due to its many sources of demand. Gold has not just preserved capital, it has helped it grow
TIME TO GO FOR GOLD?
Rhind at GraniteShares is clear about why more and more investors are considering adding gold to their IRA.
“Investors realize that they need something in their portfolio that has a low correlation to bonds and stocks and that is where gold comes in.”
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.