America seems to be enamored with the stock market these days, frequently treating it as a barometer of the nation’s economy. With an election upcoming, it has become quite a focal point. However, with the exception of a major March dip, it seems to have been at or within striking distance of a new high on a near regular basis, for practically an entire year. Unfortunately, such considerations don’t take into account the fact that barely 50% of Americans own stock of any kind and a great majority of those stockholders only participate in the market, by way of an IRA, 401k, or other qualified retirement plan. Over the past year, the market has displayed tremendous volatility and active traders have been able to capitalize at an even greater rate than in previous years. But what has all the cheap Fed money, low-interest rates, and $3 trillion stock market “liquidity” infusion by the Fed done for the average stock investor?
The simple answer is practically nothing. A year ago the Dow Jones Industrial Average stood at 27,918.20 and yesterday’s close was $28,032.38 which is a gain of less than 1/2 %. So, unless you’ve been day trading or at least a very active and successful investor, then your account probably has little, if anything, to show for all the hubbub. At this week’s Federal Reserve meeting, Chairman Powell announced that the benchmark rate range will remain at near zero until inflation rises consistently and maximum employment is reached. These policies of low-interest rates and a fat Fed balance sheet typically provide bull market pressure, but as we’ve seen play out for the past year, these artificial efforts are having less and less affect on the real-world economy and if it does ultimately succeed in helping the market to melt up, that only makes the likelihood of a more rapid and even precipitous collapse possible.
During all of this, precious metal ownership has been ignored, dismissed, and maligned. Nevertheless, over the same time period, gold for example has risen by nearly 30% and silver by more than 50%. The Fed’s plan to encourage an increase of the inflation rate plays well for the continuing increase of precious metal prices. Earlier this year, even Bank of America had to confess their expectations for gold to achieve $3,000 per ounce, before mid-2021. Regardless of election-year antics, the stock market is a house of cards built on a fluid foundation. The developing recession attempted recovery and increasing inflation will supply all the ingredients necessary to push precious metal prices higher over at least the short and medium terms. Additionally, the C.A.R.E.S. Act is providing many investors access to retirement funds not previously available, but only if arranged before the end of the year.
The dangerous economic times ahead are demanding investor attention. Protecting funds at this point has to take precedence over considerations of potential profits. But if both objectives can be achieved with a commodity like physical precious metals, then why not achieve both goals with one investment? Don’t become a victim of the coming economic storm. Call the precious metal experts at American Bullion for assistance now, at (800) 653-GOLD (4653).
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.