Gold got crushed in the post-election rally, but a little over five months into 2017, the yellow metal is up 10.5%—making it one of the best-performing assets of the year so far.
While the outlook for the U.S. economy is more positive than it was 12 months ago, if we zoom out for a moment, the big picture “ain’t so rosy.”
Gold has historically done well in times of uncertainty and panic… and with these seven worrisome signs, there could be plenty ahead.
#1: Interest Rates Are Still Near Record Lows
In the wake of the financial crisis, the Fed lowered the federal funds rate—the main determinate of interest rates—to 0%. That zero-interest-rate-policy (ZIRP) has had wide-ranging implications for conservative investors.
And even though the Fed has been hiking rates recently, rates are still nowhere near a range that would provide savers and income investors the healthy 4–6% yields they saw before the 2008 Financial Crisis.
Gone are the days when people could keep their savings in a bank account and watch their money compound. This is also a major problem for pension funds (and retirees) that rely on high-grade investments like U.S. Treasuries to earn returns.
Which brings us to…
#2: Bonds Offer Measly Returns