- July 3, 2018
- Category: Stocks
Short term interest rates are typically lower than the long-term version and the difference tends to tighten when investors become willing to pay more for near-term protection. As the stock market closes in on an end to its bull market ride and trade-war fears continue to escalate, the flight to safety is becoming a popular choice. Record levels of debt in the U.S. are a clear indication that the stock market’s party is preparing to end. But a stubborn insistence by some investors that the market’s robust run will last forever is extending the recalibration and actually setting it up for a greater and more precipitous fall. The downturn is expected by most. Now, the only conversation seems to be about the speed of the downturn and the depth. Current estimates of the onset range from next week to next year and the depth of the downturn ranges from thirty percent to seventy percent.
The spread between Two-year and Ten-year Treasury yields has fallen to the same level achieved in 2007, just prior to the most recent financial collapse. Financial experts have been pointing out such similarities since the beginning of this year and those investors risking everything by failing to diversify and instead clinging desperately to the stock market for last-minute gains have only a 1½% loss to show for it. Some investors are returning to the private-equity market for diversification, particularly in new technology fields like nano-medicine and new sustainable and increasingly efficient power sources like crystal, bio, and wind.
Risk-off behavior is getting more pronounced, particularly in light of global response to new tariffs, falling yields and rising interest rates. So not only do major economic oracles continue to trumpet warnings about the ‘impending’ economic meltdown, but the rapidly approaching possibility of an inverted yield curve has Wall Street strategists and investors on recession watch. A slowing global economy, combined with a slowing U.S. economy, combined with the growing possibility of trade wars, among countries that can ill afford such insipid and ill-timed antics have the entire global economy on recession watch.
It’s a great time for investors to wean themselves off of the high concentration of over-sold public stocks. Business 101 encourages investors to buy low and sell high. If there was ever a golden opportunity to get out of the market on a high note, we believe now is that time. Equally, gold and silver are at levels one-third and two-thirds below their highs, respectively. The time to convert a larger portfolio portion than ever before into physical gold and silver may never be, or have been as obvious and necessary. But no matter what, don’t get caught without a chair when the music stops! Call American Bullion for assistance 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.