Well, it’s here… or is it? After enjoying a bull market for several years, we’re seeing a massive sell off.
Now, the big question is, “Is the bear taking over the market?” If so, it’s time to start moving toward precious metals.
Today, we’ll talk about why the market is experiencing a downward spiral, how long declines are going to last, and whether or not it’s time to start moving toward gold and silver investments in an attempt to keep your funds safe.
Why The Market is Declining
The market is falling like a brick from the Empire State Building. The Dow Jones Industrial Average, NASDAQ, and S&P 500 are all experiencing losses.
Invest in Gold: If you currently have an IRA or 401k, learn how you can add physical gold to your retirement portfolio. Learn more about a gold IRA.
So, what is causing the declines? Here are a few factors playing into the problem…
- Chinese Market Conditions – The Chinese market crashed a couple of days ago, falling more than 7% in a single day. Since then, activity has been anything but bullish, leading to concerns in one of the world’s largest economies. Depending on who you ask, this issue single handedly dragged the global market place into the ibis. However, in my opinion, this is just the straw that broke the camel’s back. In fact, markets have been gearing up for a massive decline for quite some time.
- The Bull Leads to The Bear – I know, strange bullet point right? Well, it’s true. Price movement in the market happens through a series of highs and lows. The simple fact is that the bull can’t run forever. At some point, prices will get too high and investors will get cold feet. As a result of the years long bull market, valuations have grown to the point of absurdity. So, at this point, it doesn’t take much to change investor sentiment and cause massive declines.
- Oil Prices – No matter what market you look into, chances are that oil plays a big role. The energy sector is so dependent on this commodity that values in the sector tend to follow oil like a rabbit following a carrot. Oil has been declining for quite some time, and these declines have weighed heavy on markets around the world.
- The Federal Reserve – The Federal Reserve recently increased its interest rate. While the interest rate increase was relatively small, any change in the Fed’s rate is likely to lead to turmoil in the market. When the rate is increased, consumers have less money to spend on products and services as the higher rate reaches their pocket books. This in turn, sends a sign through corporate earnings in and around the United States. Not to mention, the Fed is planning between 2 and 4 rate increases over the next year, which should keep resistance heavy on the market.
How Long Are Declines Likely to Last
The bottom line here is that the problems in the market didn’t happen over night. It took time to build to this point of crisis, and chances are it’s going to take time before the bull regains control.
With economies around the world struggling, no end to oil declines in sight, and valuations in the market overwhelmingly high, even after declines, we can’t expect to see much by way of positivity any time soon.
Is Now The Time To Invest In Precious Metals?
In my opinion, the answer is yes. During times of market turmoil, demand for precious metals tends to rise. This leads to increasing value, making gold and silver a great way to keep your money safe.
However, I wouldn’t advice investing in paper gold and silver… go for the physical metals and you won’t be disappointed.
What Do You Think?
Where do you think gold is headed and why? Let us know your opinion in the comments below!
P.S. Want to learn how to earn a passive monthly income by owning gold & silver? My friend Minesh Bhindi is holding a Free webinar where he teaches his unique investment strategy. Click here to signup for the webinar!
[Image Courtesy of Wikipedia]