Stocks are trading at nosebleed levels, interest rates are on the rise and signs of a housing bubble abound. This is a perfect time to consider physical gold and silver as the insurance policy you need to weather the coming turbulence.
2017 marks the eighth anniversary of the second longest bull market in history. If you’ve held paper assets during this period, you’ve probably seem some impressive appreciation. But all retirement investors must prepare for when the party comes to an end.
Make no mistake: risks to the stock market are real and growing. The S&P 500 P/E Ratio is well over 25x, much higher than the historical mean of 15.64x. With hyperfast market inflation and extreme S&P P/E Ratio levels, we are clearly at a turning point seen just before previous market crashes in 2008 and 1987.
Sameer Samana, global quantitative strategist at Wells Fargo Investment Institute, says that all the recent publicity about new stock market highs now driving a feedback loop of feverish participation in the markets.
This rush is primarily a surge among unfortunate retail investors who historically always rush in just as a market is peaking.
HOUSING BUBBLE MAKES MARKET RISK EVEN HIGHER
One area of related concern is the housing market: signals suggest that a serious housing bubble has also developed. An excessive expansion of money supply, coupled with historically low interest rates has led to the current real estate bubble.
If rates rise, the end of cheap mortgages could dampen speculative real estate investments and push many homeowners over the brink. It could be the housing crisis of 2008 all over again.
The combination of stagnant wages, over-inflated home prices and higher mortgage rates make a housing crisis inevitable.
FISCAL STIMULUS: TOO STRONG A MEDICINE?
President Trump’s proposed tax cuts, deregulation and federal spending on defense and infrastructure help fuel the stock market’s historic climb. But concerns are mounting that the medicine the president is prescribing may be too strong for a U.S. economy in its eighth year of growth.
Wages have begun to rise and the jobless rate is falling. However, a recent Reuters analysis suggested that the President’s stimulus could create too-strong demand for workers in areas with tight labor markets, cause inflation to rise, force the Fed to raise rates and drive us into recession.
Economic challenges such as the decline of the nation’s coal belt or a shrinking middle class in depressed regions are extremely hard to fix regardless of who is in the White House.
According to the U.S. Treasury Department, major infrastructure needs are clustered around big coastal urban centers. Any big projects could make regional disparities even greater.
Cornerstone Macro analyst and former Fed economist Roberto Perli warns that with the labor market already tight, the Fed will likely view demand-side fiscal policies as inflationary and would tighten monetary policy faster than markets expect.
GOLD: A SENSIBLE HEDGE AGAINST MARKET CORRECTIONS
As uncertainty rises and the stock market runs out of steam, physical gold will benefit from the “flight to safety,” just as it has for centuries. Gold and silver are safe-haven assets that can provide considerable diversification protection for your portfolio if the markets experience a severe correction.
Many investors don’t know that gold often experiences a “bounce” after rate hikes happen. In 2016, gold prices rose after the Fed delivered a 25-basis point hike. Markets usually prepare for the worst scenario, so when the Fed actually takes action, the gold market most often benefits.
Regardless of the timing, gold is a critical component of any sound investment strategy and offers a level of diversification and control no paper asset can deliver.
PREPARE TODAY FOR TOMORROW’S CRASH
Getting informed is the first step in saving your IRA and retirement from stock market bubbles, housing meltdowns and government experiments with fiscal policy and spending.
It wouldn’t take much — an international crisis, political issue or natural disaster — to burst the stock market bubble and destroy millions in retirement savings.
Get your gold investment kit today and learn how to safeguard your future from an overheated stock market.
