gold bars next to financial graph

All eyes are on the Federal Reserve this week, with the chance of an interest rate hike seemingly all but certain.

So why are some gold watchers so excited?

TD Securities believes this week’s Fed policy meeting could be gold’s best chance this year to break out of its present range.

“Given recent positioning, if Fed officials do not adjust the dot plots higher, the yellow metal could move considerably higher later this week,” the company says in a report.

According to TD’s research, all five previous rate hikes generated the same basic response in gold after being interpreted (after the fact) as smaller than expected.

“Gold [sold] off ahead of the move, only to rally strongly once the rate increase was announced,” writes Bart Melek, head of commodity strategy at TD Securities.

We could be in for another example of this phenomenon this week, says TD Securities: “The probability of another rate hike is being priced at nearly 100%.” The company thinks this is too hawkish a forecast that could reverse quickly after the meeting.

“Given the current equity market weakness, recent lackluster economic data and trade war rhetoric getting louder, we judge that a hawkish tone is not … warranted at this time.”

Fellow analyst Ryan McKay believes that slower-than-expected interest rate tightening could drive gold prices higher later in 2018.

Ole Hansen, head of commodity strategy for Saxo Bank, is also bullish on gold prices because he expects the Fed will strike a relatively neutral tone and surprise the markets.

Hansen points out that this week’s Fed meeting comes as gold trades in its narrowest range since 2012. He believes gold’s momentum has been only temporarily neutralized by the threat of rising interest rates, though global uncertainty continues to rise rapidly.

Either way, should you still own gold?

Mike McGlone of Bloomberg Intelligence says gold investors should not fear interest rate hikes, whatever the eventual number implemented. According to McGlone, the only reason the Fed is raising rates is because of rising inflation, which is good for gold, especially when combined with ongoing geopolitical turmoil.

Many analysts have identified signs that the U.S. dollar is heading into a long-term bear market. McGlone says the greenback will be a crucial driver for gold prices, and with inflation increasing, this could be a great environment for gold.

RESEARCH STUDY SHOWS GOLD’S ALLURE DURING MARKET VOLATILITY

Sprott Asset Management recently released a report showing gold’s value as a portfolio diversifier. Their research shows that this year’s stock market volatility has not created significant volatility in gold, which demonstrates the precious metal’s value.

Gold’s spot volatility (as measured by the CBOE/COMEX Gold Volatility Index) moved up by just 3% in the first two months of 2018. In contrast, Sprott reports that other asset classes such as equities, U.S. Treasuries and major currencies experienced massive volatility increases of as much as 235% over the same time period.

According to Sprott, February events provided a wake-up call for markets signaling that our recent period of historically low volatility has ended abruptly.

The U.S. posted a $215 billion budget deficit in February: the biggest in six years as revenue declined. That is boosting the U.S. government’s debt load to unheard-of levels, fueling forecasts for higher yields and raising the specter of paper losses for international investors who own $6.3 trillion of U.S. debt.

Sprott believes that – long term – a default seems to be inevitable. Safe haven assets like gold could well be the natural beneficiaries of the rush to safety that will result.

Whether or not you agree a default is ahead, this recent up-to-the-minute data is just the latest proof that gold is worth considering for almost any long-term portfolio. Says Sprott in their report: “We have long been proponents of holding precious metal bullion as a portfolio hedge against general market volatility.”

STRATEGISTS CHOOSE GOLD TO WEATHER COMING STORM

“It’s going to be a calamity…”
Famed former Congressman Ron Paul thinks “there is a greater distortion and financial danger sitting out there and it’s bigger than ever before…it’s going to be a calamity.” Paul says the next stock market crash could lead to a heart-stopping 50% drop in value. Paul identifies our nation’s massive debt as one of the key reasons why a major stock market sell-off is inevitable. As you might expect, Ron Paul has been a long-term fan of gold.

“Perhaps the most expensive stock market ever…”
High Tech Strategist editor Fred Hickey says this is one of the top three most expensive stock markets in history and could even be the most distorted market ever, by some measures. Hickey says investors need to get defensive because the Fed is raising rates and selling off bonds and there remains massive levels of U.S. and global debt. Hickey recommends investors hold cash and own gold to survive any market turmoil.

“Get ready for an all-out financial war between the U.S. and China…”
Jim Rickards thinks Trump’s escalating trade war could quickly spiral into economic crisis, which could benefit gold. He believes the trade war and stock market volatility are here to stay, so investors should consider keeping a portion of their portfolio in gold.

DON’T KEEP YOUR HEAD IN THE SAND

Nobody likes to bring bad luck by imagining negative events happening in the near future. However, have you considered how your portfolio might react to the next inevitable crisis?

When the stock market suffers a major correction, the yellow metal could be your lifesaving diversifier.

When inflation hits, gold could help preserve your purchasing power of your retirement savings.

When the next global political or military crisis strikes, gold and silver could help you sleep better at night.

Where will you turn when your portfolio tanks due to circumstances in the global economy beyond your control?

Many investment professionals recommend retirement investors consider physical gold to hedge the risks of higher inflation and ever-increasing stock market risk.

Throughout history, gold has held value through times of calamity and uncertainty. There is a dearth of good news in today’s headlines, making safe haven assets all the more appealing.

We encourage you to contact us now at 888-997-6844 and make sure your retirement is stress-tested for the times to come, both good and bad.