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“This is a long-term play: higher inflation, higher interest rates, and higher gold”.– Precious Metals Advisor Tim Murphy
Following the Federal Reserve’s rate hike of 0.75%, there’s been some uncertainty among investors about the future trajectory of the market. Some people assume the Fed’s decisive action will ameliorate economic pressures while others expect circumstances to further deteriorate.
Watch the video to hear what Precious Metals Advisors Joe Elkjer and Tim Murphy have to say about where the economy is heading, what that means for investors, and why gold is looking more and more enticing.
Inflation, Inflation, and More Inflation.
The Fed has made it clear that the most recent rate hike is just one in a series of anticipated increases. In fact, another 0.75% jump is expected to happen in July. While it’s refreshing to see the economic elite finally doing something, these measures are the equivalent of trying to douse a raging wildfire with a water bottle.
The government has always been behind the curve in addressing the problem, a mistake that’s now costing the average American greatly. Inflation rates recently surpassed 40-year highs, and experts are already projecting it to continue rising at least through October.
The Economic Breaks Are Engaged
It’s nearly impossible to increase interest rates without causing adverse effects in the economy. Every time the Fed ratches up interest rates, it becomes more expensive to do business. Products cost more, labor expenses are greater, and borrowing money is more expensive.
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Right now, the US is suffering from a labor shortage as businesses struggle to find enough employees to meet customer demand. On top of that, supply chain shortages wreak havoc on availability. All these factors combined cause the economic wheels to turn slower and slower which paints a gloomier picture for the near and distant future of the market.
The Looming Threat of Stagflation
As market conditions continue to devolve, some experts see the specter of stagflation looming over the economy. Just this week, the founder of Blackwater Ray Dalio warned investors that the central bank’s current strategy would inevitably lead to an economic catastrophe of sky-high inflation and static growth.
The last time the US experienced stagflation was in the 1970s when inflation nearly tripled compared to the two prior decades. As the stock market and other fiat-backed assets tanked in value, gold prices skyrocketed1 to new heights. Where the economy stands today, the potential of stagflation isn’t out of the question which is precisely why savvy investors are looking to gold.
In Uncertain Times, The Only Certain Thing Is Gold
For centuries, gold has proven to be a reliable hedge against inflation. Along with other precious metals, gold prices tend to rise as stocks, bonds, and other fiat-backed assets falter. Just earlier this year, the value of gold hit new highs in response to worsening conditions, highlighting this metal’s resilience to economic instability.
With skyrocketing inflation, economic slowdown, and ongoing rate hikes, the conditions are perfect for gold to take off again. Since it’s impossible to time the market perfectly, it’s better to buy gold and wait than to wait to buy gold. If you’re interested in learning more about diversifying with precious metals, request your FREE COPY of our popular Gold and Silver Investment Guide today.