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Gold Continues to Shine

Gold Continues to Shine

Friday, 16 February 2018 03:07 PM Current | Bio | Archive

Stock markets may have bounced back somewhat from last week’s major declines, but they haven’t made up all of the ground that they’ve lost, with the Dow remaining over 1,000 points below its all-time high. Gold, however, continues to gain value this year and should continue to gain throughout the year. Those investors who heed the call to protect their assets with gold should do very well.

Stock Markets Still Choppy

While the S&P and Dow Jones have embarked on an impressive streak of gains over the past week, they have yet to make up for the losses they experienced in the two previous weeks, and more and more investors are worried that the Dow’s all-time highs near 27,000 points may not be seen again anytime soon. Intraday trading recently has seen some significant roller coaster action, sure to give many day traders a heart attack.

Much of the recent rebound has been driven by tech stocks such as Apple and Amazon that have largely fueled the stock market increase over the past two years. It will be their continued growth that will likely determine how long the rally lasts and how far it goes. Any signs of weakness among tech stocks could send jitters through markets.

Markets could also see additional uncertainty in the coming weeks and months if a series of lackluster economic data continues to be reported. US industrial production fell in January, whereas it had been expected to increase. Inflation seems to be rising too, and accelerating. Producer prices rose 0.4% in January, while prices for consumers rose 0.5%.

Retail sales fell significantly in January, also an unexpected turn of events. Higher interest rates have led to a drop in mortgage applications, indicating a potential downturn in the housing market if rates continue to rise. Gas prices and rent continue to increase, putting additional pressure on American households.

And of course, the ongoing political drama surrounding alleged Russian meddling in the President election threatens to rear its head every now and then. That type of political effect on markets is highly unpredictable but could have a severe impact on markets, particularly if President Trump ends up getting swept into the proceedings.

Gold Price Outlook Looking Good

Despite a drop in gold demand last year, the price rose 13% over the course of 2017. So far in 2018, gold continues to rise in price as demand is beginning to increase in response to the volatility in stock markets.

Much of the decline in gold demand last year was due to decreased demand in the United States, most likely due to the strength in stock markets. Uncertainty in stock markets should continue to boost gold demand this year, while further declines in stock market indexes should result in a rise in the price of gold.

Gains of 10-15% for the year wouldn’t be unexpected, but they could be even larger. Remember that while gold’s price increased nicely during the financial crisis, it didn’t break out until after the worst parts of the financial crisis were over and stock markets were slowly on the mend. It was the lackluster performance of the economy and of stock markets that sent gold prices skyward. That could happen again this time around if stock markets crash and take a while to recover.

That’s why it’s important to remember that investing in gold isn’t a get rich quick scheme, its a long-term multi-year plan to protect your assets from rising inflation and falling stock markets. Gold has been trusted as a store of value and hedge against inflation for centuries, and it continues to fill that role today.

Compared to a portfolio that was totally invested in stocks, a portfolio that was 30% invested in gold would have performed nearly 60% better during the depths of the financial crisis, and would still be worth more today. That’s the power that gold has to protect investors’ retirement assets from stock market crashes.

There is no better, no more effective asset to protect your retirement assets than gold. Investing in gold is true diversification, making sure that your portfolio is not completely subject to the performance of Wall Street. When stocks decline, gold continues to rise.

And with a gold IRA, investing in gold is easier than ever. You can even invest in gold by using existing 401(k) or IRA retirement funds, rolling over those funds tax-free. A gold IRA enjoys all the same tax advantages as a traditional IRA, allowing you to use pre-tax dollars and deferring taxation until distribution. It greatly simplifies the process of investing in gold, making gold’s protective abilities available to a wider number of investors.

So if you’re worried about the future of stock markets and think that a major correction could be coming this year, you owe it to yourself to look into investing in gold. It could be the difference between maintaining your retirement wealth or waiting a long time to hope for a stock market recovery.

Trevor Gerszt is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.

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Stock markets may have bounced back somewhat from last week's major declines, but they haven't made up all of the ground that they've lost, with the Dow remaining over 1,000 points below its all-time high.
gold, IRA
Friday, 16 February 2018 03:07 PM
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