Daily Wealth: This Worldwide Shift Is a Major Bullish Sign for Gold
Article by Ben Morris in Daily Wealth
We couldn't ignore it if we tried...
The developed world's three largest central banks have all suggested that monetary stimulus is coming.
The U.S. Federal Reserve made the first move. It decided to cut interest rates two weeks ago. And both the Bank of Japan and the European Central Bank have been talking about stimulus, too.
We're not news junkies. Most media reports on the markets just distract investors and traders from more important themes. But when the world's most influential central banks all plan to make major policy changes, we have to listen.
You see, these major central-bank policy changes don't happen often. But when they do, they affect the markets in a big way.
Is all this good for stocks? In the short term, yes... Low interest rates encourage borrowing and investing.
Longer term, though, we're not so sure. Central banks were able to prop up the markets effectively after the 2008 financial crisis. But now, we're more than a decade into a bull market.
Interest rates are already low. And stock valuations are much higher. So while a crisis isn't imminent, central banks are unlikely to add much more fuel to this bull market.
Precious metals, though, are another story...
Gold and silver have not been in a bull market for 10 years. They've been either falling or stuck in the gutter since 2011. And lower interest rates usually support higher precious metal prices.
Governments around the world are standing at the line, ready to get back into the race to devalue their currencies. So once again, gold and silver look attractive as a form of savings compared with paper currencies.
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