By Capital Gold Group, Special for USDR
Bloomberg and CNBC issued warnings last week that the market is on the brink of a major correction. At this unique point in history the stock market is artificially propped up by the Fed, the fear index is at an all-time high and money is pouring into safe haven assets.
Most concerning is the speed at which markets have propelled themselves skyward since the November election of President Trump. Business optimism has rallied the Dow to 20,000, and plunge protection has shielded investors from a volatile fear index, but the numbers simply don’t support this rally.
The January 2017 jobs report showed that President Trump has already successfully added 227,000 jobs to the US economy. The problem is that the wages of these jobs were disappointingly weak. Weak wages are an indicator of a weak economy and looming inflation.
Inflation expectations have risen considerably since the Fed went on the record last year with the intention to raise rates three times in 2017. So far, they haven’t raised rates at all — likely because they would trigger the impending stock market collapse.
The stock market is already tremendously overvalued. We recently saw history made when the Dow hit 20,000, and the problem with that milestone is that it’s been fueled entirely by investor optimism. President Trump very well may do great things for the economy, however, our nation is still $20 trillion in debt, and threats to our national security should have big business treading far more cautiously.
Stocks aren’t accurately representing market nervousness. Plunge protection — the artificial propping up of index volatility by the Fed — is preventing average investors from preparing for the tsunami that’s about to crash down on them. The GEP Uncertainty Index is now at its highest ever level on record, yet the Volatility Index (VIX), is unusually calm. In fact over the past year, the VIX has declined more sharply than we’ve seen since 2004. Uncertainty up, but volatility down doesn’t make sense — there’s clearly something wrong with this picture.
The final indicator that stocks are getting ready to crash is this rare combination: rising bond yields and strengthening metals at the same time as a VIX decline. Both stock market crashes of 1973 and 1987 were both preceded by this exact trend, which we are seeing again now. This is a crucial trend to watch because these tandem rises indicate markets on the verge of turning in the opposite direction.
A crumbling EU, our own weak economy and rampant threats of Islamic terror have all melded together into one big iceberg, and Dow 20,000 is the Titanic. President Trump, at the helm of our ship, will do what he can to steer us to safety, but behind him stand the hedge fund managers who have begun stockpiling precious metals at a breakneck speed.
Do not get caught tuxedo-ed and celebrating below deck when this iceberg hits. Every investor’s dream is getting in at the low and getting out at the highs — but that rarely, if ever happens. The prudent investor keeps an eye out for danger and exits while the going is good — instead of waiting for his assets to lose half their value before moving out.
“The time is now to take money out of stocks, and it’s essential to diversify into a safe haven asset like gold,” says Jonathan Rose, CEO of Capital Gold Group. People with nest eggs situated in IRAs should be rolling a portion of them sideways into a precious metals IRA.
Precious metals market trends just concluded their best week since April, gold having already risen 6% since the start of the year. Geopolitical tension is going to continue this gold rally, and all it will take is one major economic event to escalate this gradual gold climb into one massive jump. Those who diversified into metals during the late-2016 lows may have made the best investment decisions of their lives, and those who aren’t currently invested in metals at all must wake up to their own best-interest. Protected assets are the economic liferaft, because once the iceberg hits — seats are going to be impossible to find.
SOURCE Capital Gold Group