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There are big changes ahead for the economy.
The Federal Reserve Board has announced that it will be tapering off its quantitative easing program. In other words, come July it will no longer purchase bonds to pump the market with liquidity.
The effect? Without easy money filtering into the system, we can expect interest rates to ratchet up and stymie the flow of money into the stock market. In short, a stock market correction.
Don’t just take our word for it. Some of the top minds on Wall Street agree that an equities correction is coming before 2022, including 58% of investors recently polled by Deutsche Bank.
Nothing about the stock market makes sense anymore. Tesla (NYSE: TSLA) sells only 1% of cars globally yet is priced more than all the companies combined that make up the other 99%.
We haven’t even touched on inflation yet, which is currently at generational highs. The most recent CPI data indicates a 5.4% year-over-year inflation rate, the highest since August 2008.
However, we’re likely only seeing the tip of the iceberg. Inflation data tends to lag behind real-world price increases by several months. Anyone who has frequented a grocery store lately can probably attest that their weekly bill has gone up by more than a mere 5 percent.
With sky-high inflation, the Federal Reserve Board will inevitably crank up interest rates. It’s no longer a hypothetical—it’s only a matter of when. Initially, the Fed chair committed to rate hikes no earlier than 2023, but with inflation outpacing economists’ expectations, new models suggest a rate hike long before then.
With the Fed in retreat, investors should be looking for alternative options for their wealth. When the easy-money monetary policies go away, the stock market could come crashing down.
Fortunately, you have options.
The historical record speaks for itself. From the dot-com bubble to the global financial crisis and beyond, gold has outperformed the stock market during times of market uncertainty.
Gold prices rose a slow and steady +1.5% during the month of October. Amid blazing hot and unstable markets, gold is one of the only stable assets we have left.
Also lost in the noise was Bitcoin, which skyrocketed +40% from $43,800 per token on October 1 to $61,500 by month-end. Whether we’re seeing a short-lived rally or the start of something much larger remains to be seen.
No matter what the future holds, savvy investors should consider diversifying their retirement portfolios. Otherwise, you’re setting yourself up for pain when the next market crash occurs.
To get started, contact a self-directed IRA provider today. With their assistance, you can easily set up and fund a retirement account with investments in gold, silver, cryptocurrency, and myriad other alternative assets you can’t get with regular brokerage accounts.
Mark Turner is an author and editor at Sophisticated Investor. He has over two decades of experience in the financial industry as a broker in both Chicago and New York and has written for several top tier publications. He currently covers the topics of alternative investments, geopolitical events, US economy, portfolio diversification and others.
