While next weeks presidential election dominates headlines and stokes investor fears, recent economic reports continue to paint a placid picture of U.S. economic health.

 Last Fridays news on 3^rd Quarter Gross Domestic Product is a prime example. The initial reading for Q3 GDP came in at 2.9% annual growth, the strongest quarter in two years.

This favorable report helped raise the likelihood of a December Federal Reserve rate hike. The probability of a quarter-point increase at the Feds December 14 climbed as high as 75% in recent days, according to CME Group.

Beneath the surface, however, the economic waters are churning. That means gold should continue to shine for investors who are looking to diversify their holdings and preserve the value of their wealth from a possible severe market downturn.

While the headline growth number was strong and points toward a continuing recovery, not all economists were impressed by the report. The Wall Street Journal noted the robust GDP figure was juiced by several one-time events, including a jump in exports largely driven by a record soybean harvest.

Even with the boost in GDP in the Q3 report, the trend of economic growth remains anemic at best. Over the previous four quarters, the average annual GDP growth rate sits at a weak 1.5%. Earlier this year, many economists expected U.S. economic growth to be well north of 2% for all of 2016.

Whats holding the U.S. economy back? One factor has been consumer spending, a primary driver of U.S. economic growth.

Personal spending rebounded in September by 0.5% after a three-month slowdown, including a 0.1% decline in August. But consumers outlook about future spending, which depends largely on their prospects for work and income, has been on a steady downward trend as of late. The University of Michigan index of consumer sentiment hit its lowest point in two years this past October.

Then there are concerns about inflation. Septembers annual inflation rate was reported at 1.5%, the highest level in two years. That number largely reflects higher prices drivers were paying to gas up their vehicles during the month.

Perhaps more significantly, the Feds preferred inflation indicatorthe personal consumption expenditures index, which strips out volatile energy and food prices was steady in September at 1.7% on an annual basis. Thats below the Feds stated target of 2% annual inflation rate, indicating that a fair amount of price weakness remains in the economy.

Inflation expectations over the longer-term have swung higher over the past year, according to market indicators from bond investors. At a 10-year break even level of 1.74%, expectations for future prices increase are still well below long-term averages, but these indicators are much higher than where they were at the start of this year.

A major worry that investors and economists see in this mixed bag of data is a future of higher inflation without a corresponding increase in economic growth. Rising prices would be expected in a time of expansion. But in the absence of economic growth, higher inflation would be a sign of poor health in the broader economy.

Financial markets are right to show concern. A recent spike in the VIX index, otherwise known as the markets fear gauge mostly reflects anxiety over a Trump election victory as the GOP candidate shows surprising strength in the latest polls. On November 1, the VIX closed at its highest level since the Brexit-related market turmoil in June.

But fears about the strength of the U.S. economy also persist. The most recent reports reveal an economy struggling to fire on all cylinders. The U.S. economic engine appears to be running well at first glance. But a look under the hood shows potential warning signs that could stall the current recovery.

The sum of these fears continues to support strength in gold prices. The yellow metal continues to shine, even after a rise of 20% for the year-to-date. Once the uncertainty around the election is settled, there are enough concerns about the economy to hold investors attraction to gold for the near term.

Germany’s biggest lender reported an unexpected quarterly profit October 27. Despite the seemingly upbeat news, meaningful concerns loom large over the troubled bank as it continues to negotiate a multi-billion dollar fine with the U.S. Justice Department.

While this may seem very distant and far away, it could have direct ramifications for your portfolio in the weeks ahead.

Since hitting a peak in July 2015, Deutsche Bank shares have fallen more than 65 percent as confidence in the bank continues to crumble. Germany is traditionally home to stable economic policies and strong banks, which adds fuel to the current wave of financial system concerns.

The German lending powerhouse is mired in tense negotiations with U.S. Justice Department officials. The U.S. government has proposed a massive $14 billion fine in relation to Deutsche Bank’s mis-handling of mortgage backed securities during the 2008 global financial crisis.

The German bank reportedly has stated that it doesn’t intend to pay “anywhere near” that amount.

The negotiations have put stress on U.S.-German relations with some calling it a new “economic war.” The Washington Times reported that “the huge Justice Department fine is in fact retaliation by the Obama administration for the EU’s ruling in August that U.S. computer giant Apple must pay some $13 billion in back taxes over its operations in Ireland.”

A Mini Run on the Bank

A broad of array of questions continue to swirl around whether the German bank has enough available cash to meet its obligations. This has triggered a mini type of “run on the bank” as clients pull their deposits from Deutsche bank.

Clients have reportedly withdrawn billions of euros amid questions whether the bank has adequate capital to cover potential losses and meet regulatory requirements.

In this type of environment, gold tends to shine as a safe haven and a vehicle for wealth preservation for investors. Gold is a time-honored investment that investors turn to in times of market distress, bank uncertainty or potential financial system crisis.

The Deutsche Bank story is still unraveling and is far from complete. There are concerns that a $14 billion fine could cripple the bank. The International Monetary Fund said in June that the bank “appears to be the most important net contributor to systemic risks in the global banking system.” Rising risks about bank liquidity and financial system integrity only increase the attractiveness to gold and other precious metals.

Is Deutsche Bank The Next Lehman Brothers?

This brings back memories of 2008, the potential for a domino impact and a larger bank crisis. Deutsche Bank is a global bank with a deep reach into other financial institutions.

Could this become another instance of Too Big To Fail? German Chancellor Angela Merkel has not ruled out a government bailout of Deutsche Bank, but she hasn’t signaled her support for one either. This leaves many questions unanswered for investors.

Spillover from Deutsche Bank to globally systemically important banks

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Europe’s banking crisis is back. The integrity of Germany’s largest bank is at stake. The euro currency has been moving in tandem with Deutsche Bank shares in recent weeks. If the Deutsche Bank debacle turns into a domino effect the impact on the euro will be significant and it could trade significantly lower.

Deutsche Bank poses a major risk to U.S. stocks as well and equities could tumble if concerns about the banking system escalate. If this were to unfold, gold would likely surge as risk-averse investors pile into the safety of gold.

Consider now how well your portfolio is diversified? Are you hedged against the many risks that are rampant in today’s uncertain economic environment? Gold provides stability, wealth preservation and the opportunity for price appreciation and last but not least is an important component to effective portfolio diversification.

Gold has slipped off its 2016 highs, which presents a better value and buying opportunity for long-term investors. Global buyers of gold are already using the current price dip as a buying opportunity. Will you? Call us now and our portfolio managers can help.

Recent news that the Social Security cost-of-living adjustment for 2017 amounts to 0.3% or about $5 for the average retiree doesn’t help much in paying the bills.

The rising cost of living is a major concern to many Americans. And, there appears to be a mismatch in how the government rates inflation versus the costs that people are actually paying for a number of key goods and services. In a climate of rising prices, gold tends to shine as a safe haven for investors who look to protect the value of their purchasing power.

When it comes time to calculate cost of living adjustments for Social Security, the government uses the CPI-W. This data gives less weight to medical care and housing costs. These are two categories that have climbed by more than 7% and 5% respectively over the past 12 months.

While official government numbers show that inflation remains historically low, the costs of many goods and services is increasing. That is normal. Throughout the past 100 years, the rate of inflation has been volatile ranging from 18% in 1918 to almost 24% in June 1920. The 1979-1981 period saw double-digit inflation numbers as well.

Despite the wide range, the average rate of inflation over the last 100 years is around 3% per year. That simply means, on average, things cost 3% more each year. There is a mathematical principal that can easily show how long it takes for prices to double.

The Rule of 72

72 / 3% inflation rate = 24 years until the price doubles

This shows that the overall cost of living doubles on average every 24 years. For those who plan to retire 25 years from today will find a world where everything costs double what it does today.

Let’s look back at some historical prices. How much did a loaf of bread, a gallon of milk, a house and a car cost in 1914?

 We all know a dollar doesn’t buy what it used to. The value of paper money rises and fall, especially as central banks have flooded the world’s money supply in recent years. When the U.S. dollar declines in value that means you can purchase less with it.

According to the Rule of 72, the cost of your current lifestyle today will cost twice as much in U.S. dollars in 24 years. The same lifestyle the same gas for your car, dinner’s out, occasional trip to the movies will cost twice as much.

Gold is a time-honored inflation hedge. If inflation were to rear its ugly head again and soar to double digits, gold holds its value and often increases during inflationary periods. As a hard asset, gold is negatively correlated to both stocks and bonds. Throughout history gold has proven to be a reliable vehicle to protect the purchasing power of your dollars. Is your portfolio properly hedged right now?

Call Blanchard today at 1-866-764-9135. Our portfolio managers would be happy to design an individualized inflation protection plan for you.

The civil war in Syria is a complicated picture. For an outside observer, it can be difficult to know who the different factions are, what alliances they have, and what aims they represent.

The Syrian conflict is important to monitor because it could have wider reverberations throughout the world, including the financial markets. Investors may not need to unravel all of the complexities of events in Syria, but they should know what geopolitical risks to watch for as the conflict continues.

Investor anxiety tends to rise when geopolitical risks escalate. In a climate where the likelihood of these risks grows, gold tends to shine as a safe haven for nervous investors.

Among the biggest geopolitical risks evolving out of the Syrian conflict is a re-emergence of Cold War tensions between the U.S. and Russia. In Syria, Russia sees a stage on which it can seek to assert its military and diplomatic might, with the ultimate goal of re-establishing its influence as a global superpower.

The U.S. and Russia do have some overlapping objectives in Syria. The U.S. wants to crush Isis-aligned terrorist groups in Syria. These fighters are also battling the government of Syrian leader Bashar al-Assad, who has support from their traditional ally in Russia (along with another U.S. rival, Iran.)

Despite sharing some objectives, the U.S. and Russia appear to be more often at loggerheads on the Syrian stage. With military weaponry involved, there is always a potential for lethal engagement, whether errant or unintentional. Perhaps the more likely conflict between the two countries is a breakdown in cooperation and an escalation of tension that unsettles the existing geopolitical order.

What is emerging out of Syria and other hot spots is a changing dynamic between global superpowers in the U.S. and Russia. China as well is taking steps to become a third global superpower and act as a counterweight to U.S. dominance.

The likelihood of a wide-scale war between these nations and its allies is currently low; everyone involved has more to lose than to gain from pursuing a broader military conflict. Whats more likely are periods of escalating tensions that recall the rivalries of the Cold War, with the potential for occasional flare-ups that focus attention on the significant geopolitical risks.

This evolving picture of geopolitical risks, with Russia and China emerging to pivot U.S. hegemony, would help support prices for gold and other precious metals over the long-term. As long as the risk of rising tensions between these superpowers hangs in the air, gold and other precious metal will remain attractive to anxious investors who seek safe havens for preserving their wealth.

Blanchard and Company is the largest and most respected investment firm of its kind. Call 800-880-4653 today and speak with your very own portfolio manager.

If you are buying a home you are loving the historically low interest rates offered at banks right now. But, if you are a saver with traditional accounts like CDs and money market accounts you been punished with near zero returns on your money in this environment.

For investors, in the low interest rate environment, double-digit returns have been hard to find in stock and bond investments. Gold has shined in 2016 and remains up 19% on the year as of Oct. 19. The yellow metal has backed off its earlier high, but remains a top performing asset this year.

At the start of 2016, Wall Street was bracing for three or four interest rate hikes this year. As of October none have been delivered. The Federal Reserve pulls the levers on the nation’s interest rate policies and the benchmark fed funds rate remains at a nearly rock bottom level of 0.25-50%.

The Federal Reserve has been flipping back and forth all year long. But as of October it has done nothing. What’s the problem?

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Federal Reserve Chair Janet Yellen and her team have been hamstrung by various economic concerns this year, which have prevented interest rate increases.

What’s Holding The Fed Back?

• Sluggish world-wide growth and concern about the impact of outside shocks like weak Chinese growth and Brexit on the U.S.
• Below-trend inflation in the Fed’s favored gauge the Personal Consumption Expenditure (the Fed has a 2% target for inflation)
• Below-average growth here in the United States

Many small business owners know firsthand that while the country is officially in an expansion phase, current levels of economic growth remain below the more normal 3.5% rate or even higher. The U.S. is on track to deliver GDP growth around 1.5% this year.

One perspective is that the Fed’s inability to raise interest rates is actually a worrisome signal for the U.S. economy it means that central bankers don’t believe the economy is strong enough to withstand a minor bump up in interest rates.

An 8-Year Hangover

This problem remains a hangover from the 2008 global financial crisis, when the Federal Reserve lowered rates to near zero to prevent another depression. While that was 8 years ago, the economy still hasnt fully recovered.

The Fed wants to “normalize” interest rates and bring the fed funds rate to a more historically normal level in the 3.5% or so range. But, weak economic conditions across the country have held the Fed back. They don’t want to rock the boat and tip the economy back into recession.

There are still two more chances for the Fed to hike interest rates this year.

Fed Meeting Dates – Mark Your Calendar:

• November 1-2
• December 13-14* includes a post-meeting press conference

The November meeting is seen as a non-event as it lies a week ahead of the Presidential Election. The Fed is unlikely to rock the stock market’s boat a week before the vote. That leaves all eyes on the December meeting.

Watch Market Views In Real Time

If you are curious and want to follow the market’s real-time thoughts on the odds of a rate increase use the CME Group FedWatch Tool.

With the fed funds rate currently at 0.25-0.50% –the CME FedWatch tool shows that the market has priced in a 60% chance of a rate hike at the Fed’s December meeting. See the chart below.

CME Group

What Does This Mean For Gold?

Traditionally, a rising interest rate environment is seen as negative for gold. But, it is important to view the Fed’s abnormally near zero interest rate levels in perspective.