Another risk is a significant stock market correction (or crash).
This chart from Frank Holmes at US Global Investors points out that the S&P 500 is at an extreme.
The longest consecutive annual rise in US equities is six years. And since 1874, it’s happened only twice—from 1898 to 1903, and the six years through 2014. If the market ends higher this year, we will have entered uncharted territory—and increased the risk of a more serious correction or crash.
When the inevitable occurs, how will investors respond? Will they remember the scare in 2008 and sell? How will the Fed and global central bankers respond to a falling stock market? Whatever happens, the odds are high that gold will be sought by investors in that scenario.
Article originally posted in the February issue of Smart Metals Investor at HardAssetsAlliance.com.