• The banking crisis spurred gold demand in the first quarter of 2023 onto one of its highest levels on record
• Prices were bolstered by Russia acquiring sanction proof assets
• A gold buying opportunity presented itself as fears of continued rate hikes caused a price dip

Investors Flock to Gold

Gold saw one of its best quarters this year. Global economic instability sent investors flocking to the precious metal. State gold buying also bolstered demand. But fears of continued rate hikes caused a recent dip in gold prices. This dip presents investors with a tremendous gold buying opportunity.

Investors ran to gold to secure their wealth after the biggest banking meltdown since the 2008 Great Financial Crisis. As evidence, the US Mint saw historical demand for its gold bullion.

The Mint sold 215,000 ounces of gold in various denominations of its America Eagle gold coins. Those are the best March sales since 2018. In addition, the Mint had its best first quarter performance since 1999. They sold 435,500 ounces in the first three months of this year. March gold sales are up 38% from last year. Quarterly sales are also up.¹

The US isn’t alone in record gold sales. The Perth Mint sold the most gold coins since November. And their sales were up more than 54% from February. The managing director of Metals Focus said, “Coin and bar demand since the pandemic have been eye-watering high. Global demand for gold and silver are expected to remain healthy through 2023.”²

The demand for gold extends beyond individual and institutional investors. As China continues its gold buying spree, Russia is fervently building its own gold reserves. They are strategically investing in assets that can’t be sanctioned. Russia’s Central Bank Governor said, “We are building reserves based on what assets cannot be used for sanction pressure and how our foreign trade is changing.” Following Russia’s invasion of Ukraine, around $300 billion was frozen due to sanctions. That amount is about half of the country’s international reserves. The G7 has pledged to maintain sanctions for as long as the Ukraine war continues. Analysts expect Russia’s gold purchasing to continue for as long as sanctions remain.³

Price Dip Presents Buying Opportunity

After surging to near all-time highs, gold prices dropped below the key $2,000 level. The price dropped out of concern that the Fed won’t cut interest rates in the face of persistent inflation. The St. Louis Fed Chief said the Federal Reserve should continue raising rates. A stronger dollar reduces overseas demand for the greenback-priced gold. And higher rates blunt non-yielding bullion’s appeal.

Recent earnings reports and a stock market rally also put downward pressure on the price of gold. The chief market strategist at Blue Line Futures said, “Anytime you get earnings, you get a lot of people chasing individual stocks and that could also cause them to not invest so much in metal.”⁴

However, the head of commodity strategy at Saxo Bank said gold’s rally has only been delayed. There is a growing consensus that the Fed will be forced to relent on interest rate hikes. The banking crisis and a looming severe recession will compel the Fed to alter its policy.

The temporary dip in gold prices presents a buying opportunity for investors. According to technical analysis from the Daily Forex, gold prices are on target to hit record highs this year. People looking to safeguard the value of their portfolios from the current economic turmoil should learn if gold is right for them. You can speak to an American Hartford Gold precious metals specialist to see how a Gold IRA can benefit you. Call them today at 800-462-0071.

Notes:
1. https://www.kitco.com/news/2023-04-18/Investors-flock-to-gold-silver-bullion-to-protect-wealth-in-Q1.html
2. https://www.kitco.com/news/2023-04-18/Investors-flock-to-gold-silver-bullion-to-protect-wealth-in-Q1.html
3. https://www.kitco.com/news/2023-04-18/Russia-is-building-its-reserves-with-assets-that-the-West-can-t-sanction-says-central-bank-chief.html
4. https://www.reuters.com/markets/commodities/gold-drifts-lower-firmer-dollar-fed-rate-outlook-2023-04-19/

• The Consumer Price Index indicated that inflation rose more slowly in March
• Despite the slowdown, inflation is still punishing American consumers
• Even if the Fed slows interest rate hikes, current prices may be the new baseline

Inflation Still Rises, Albeit More Slowly

The most recent Consumer Price Index (CPI) indicated that inflation rose more slowly in March. Not that inflation decreased or even stopped rising. Only that the pace of price increases slowed down. So, while the news was positive for the Federal Reserve, it was no comfort to most Americans who are still struggling with high prices.

The Federal Reserve has set a target of 2% inflation. The current rate is over double that at 5%. CPI climbed 0.1% in March after rising 0.4% in February. The CPI slowdown is attributed to the dropping price of gasoline. After OPEC+ announced a production cut, this drop is predicted to be short lived. The rate of inflation is down from a peak of 9.1% in June of 2022, but the pain of inflation is still echoing throughout the economy.¹

While prices are growing at a slower rate, increases are not stopping altogether. The cost of essentials is still punishing consumers. Food prices, for example, climbed 10% in February and have been rising at double-digit rates since May of 2022. Additionally, rents had their largest one-month increase on record, and day-to-day living expenses are hurting Americans.²

Even as inflation continues to slow, it won’t reverse outright. Only in rare instances do prices decline on an annual basis. And this is not even a given during recessions. The bottom line is that the higher prices that have become a hallmark of the post-pandemic U.S. economy are here to stay.

Bankrate said, “The inflation we’ve seen over the past couple of years has increased household expenses and essentially set a new base, and those expenses are not going to fall in a broad-based way. They just might not go up as fast.”³

Inflation and the Fed

Analysts think the slowing pace of inflation may cause the Fed to slow their pace of interest rate hikes. As the market stress from last month’s bank collapses eases, economists expect the US central bank to raise rates one more time in May. Investors predict another 0.25% hike. After that, they could pause their fastest monetary tightening campaign since the 1980s in June.⁴

The most recent jobs report may hinder the Fed’s rate slowdown. The report showed that unemployment is dropping and over 1 million jobs were added in 2023. This is fanning the flames of inflation even as wage growth is declining. Basically, people are working more for less. This means that the Federal Reserve will likely keep raising rates. It has done so by 475 basis points since March of last year, from near zero.⁵

Rising costs for food, rent, and other daily necessities are taking a toll on household budgets. The Federal Reserve is likely to keep raising rates to combat inflation. Not only are these hikes impacting wage growth and job opportunities, but they are also causing banks to fail and stocks to crash. With no end to inflation in sight, investors should look for means to preserve the value of their portfolio. A Gold IRA from American Hartford Gold is designed to protect your retirement funds from inflation and soaring interest rates. Contact us today at 800-462-0071 to learn more.

Notes:
1. https://www.reuters.com/markets/us/us-consumer-prices-rise-moderately-march-underlying-inflation-still-hot-2023-04-12/
2. https://www.nbcnews.com/business/economy/inflation-rate-march-2023-is-it-better-or-worse-economy-rcna79150
3. https://www.nbcnews.com/business/economy/inflation-rate-march-2023-is-it-better-or-worse-economy-rcna79150
4. https://www.reuters.com/markets/us/us-consumer-prices-rise-moderately-march-underlying-inflation-still-hot-2023-04-12/
5. https://www.nbcnews.com/business/economy/inflation-rate-march-2023-is-it-better-or-worse-economy-rcna79150

• The collapse of Silicon Valley Bank was the 2nd largest bank failure in US history
• Stocks plummeted as fear of more bank failures shook the foundations of the global economy
• Investors flocked to gold, sending prices of the precious metal soaring

The Collapse of the SVC Bank and the Economic Effects

The collapse of Silicon Valley Bank, the 2nd largest bank failure in US history, sent investors and officials into a panic. Close to 190 banks could face Silicon Valley Bank’s fate, according to a new study.

Most of the money was not insured, as the FDIC only guarantees bank deposits up to $250,000. According to some reports, more than 90% of all deposits fell outside of that threshold, resulting in an “awful lot of people losing an awful lot of money”. It’s highly probable that those people will never see that money again.

Fears of a global financial meltdown like the 2008 Financial Crisis are growing. More bank runs could decimate even insured depositors as the FDIC exhausts its emergency funds.

Stock prices are plummeting as the contagion spreads around the world. Credit Suisse bank had to be bailed out, leaving $17 billion of its bonds worthless. Economic conditions hold a frightening resemblance to the Lehman Brothers collapse that ignited the Great Recession.

That crisis saw the value of retirement funds drop in half after the Dow crashed nearly 7000 points. However, during the same time, physical gold leapt from $650 to a historical high of $1950.

Precious metals are a proven hedge against financial turmoil. Gold exists independently of the banking system. Analysts predict the rush to the safe haven asset will send its price to new record heights. Acquiring precious metals could not only preserve your wealth but potentially earn you a profit as everything else crashes.

Contact us today at 800-462-0071 to learn how you can protect your funds with precious metals or a Gold IRA.

“Tucker Carlson Tonight – Second Largest Bank Failure”
Source: Fox News
Date: Mar 10, 2023
Link to the video: https://www.foxnews.com/video/shows/tucker-carlson-tonight

• Social Security recipients may by surprised with higher taxes this year
• The income threshold determining your tax burden hasn’t been raised in decades
• Beneficiaries can adopt strategies to reduce or avoid stealth taxes on their Social Security

Social Security Benefits Exposed to Higher Taxes

Some retirees could be in for a shock this tax season. Social Security recipients may experience a phenomenon known as “stealth taxes” on their benefits. Taxes are going up because the government hasn’t changed the Social Security income limit since 1984.

The government changed a lot of things in response to soaring inflation. They changed federal tax brackets and contribution limits for retirement accounts. The government also adjusted the size of the standard deduction. In addition, they raised the Social Security cost-of-living adjustment.

One thing they didn’t change was how much money you can earn before having to pay taxes on your benefits. The low-income thresholds are resulting in more and more seniors paying higher taxes.

Here’s how it works: depending on your income, up to 85% of your Social Security benefits can be taxed. The percentage of all tax returns with taxable Social Security benefits grew to 33% in 2017 from 7.4% in 1999. The Congressional Budget Office predicts that it will grow to more than 50% by 2046. This is a troubling trend for many seniors. They view it as discriminatory double taxation.1

Seniors are pushing for the income thresholds to be adjusted for inflation. Indexing the threshold to inflation would greatly reduce the number of people owing extra taxes. In fact, 58% of seniors are in favor of getting rid of the tax altogether. Social Security overhaul is particularly difficult because of a divided Congress. Any overhaul of Social Security needs bipartisan support.2

The SECURE 2.0 Act (SA 2.0) addressed issues around retirement. But it had unintended consequences. For example, SA 2.0 raises the age at which required minimum distributions (RMDs) begin from 72 to 73 in 2023. Advisors consider this a stealth tax increase. Retirees now have almost five more years of growth subject to taxation. This can potentially impact Social Security and Medicare costs.3

Planning for Taxes

Planning can address potential tax implications. SA 2.0 provides more catch-up provisions for those between the ages of 60 and 63. You can make a catch-up contribution of $10,000 to an employer-sponsored retirement plan starting in 2024. Be warned though. Catch-up contributions for higher earners can be forced into a Roth 401k. This contribution would be taxable income.

Adjusting withholdings can help reduce tax bills. Beneficiaries can consider having at least 10% withheld, or perhaps 12%. Relying on income sources such as traditional IRAs or 401(k)s may help delay claiming Social Security benefits. This can result in higher benefits for the rest of a retirees’ life.4

Stealth taxes on Social Security benefits are a growing concern for seniors. Inflation is already making life for retirees more difficult. And a divided Congress means there is little chance of the income thresholds changing anytime soon. Retirees can plan for potential tax implications. Advisors suggest moving funds into a Roth IRA so withdrawals aren’t subject to taxes. A Gold Roth IRA combines tax advantages with the wealth protection benefits of precious metals. Contact us at 800-462-0071 to learn more about how you can protect your retirement.

Notes:
1. https://www.usatoday.com/story/money/taxes/2023/03/16/unadjusted-inflation-taxes-social-security-hurting-seniors/11465773002/
2. https://www.usatoday.com/story/money/taxes/2023/03/16/unadjusted-inflation-taxes-social-security-hurting-seniors/11465773002/
3. https://www.advisorperspectives.com/articles/2023/02/20/beware-of-stealth-tax-increases-in-secure-2-0
4. https://www.cnbc.com/2023/04/05/social-security-benefit-income-may-lead-to-a-stealth-tax.html#:~:text=Not%20moving%20the%20brackets%20or,stealth%20tax%2C%E2%80%9D%20Freitag%20said.

• The Federal Reserve’s monetary policy is blamed for inflation, recession, and bank failures
• States are legislating gold as currency to undermine the Fed’s monopoly on money
• Gold stands to gain in value as more states adopt it as legal tender

States Look to Gold as Currency

From causing inflation, to crashing banks and forcing a recession, the Fed’s monetary policy is leading some states to turn to gold. Following in the footsteps of several other states, an Arkansas bill is proposing to make gold and silver legal tender. This would mean that Arkansans could use gold or silver coins as money instead of just as investment vehicles. State adoption of gold as a currency could have a widespread impact on the US economy.

The Arkansas bill is rooted in Article 1, Section 10 of the U.S Constitution. It states that “No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts.” Advocates say this article allows states to coin their own currency from precious metals. The Arkansas bill would also repeal the state capital gains tax on gold and silver. This would reduce the transaction costs of using them as money. If the bill passes, the people of Arkansas could use gold and silver in everyday transactions.

In 2021, Arkansas repealed the sales tax on gold and silver, which set the foundation for this bill. Repealing those taxes was a step toward treating gold and silver as money instead of commodities. Arkansas is not alone. Utah, Wyoming, and Oklahoma have already passed similar bills. And eight other states currently have legislation pending. 1

A Counterbalance to the Federal Reserve

These bills aim to introduce competition into the monetary system and nullify the Federal Reserve’s monopoly on money. The Federal Reserve creates a monopoly based on its fiat currency. It can easily create money out of thin air without the backing of gold or silver. This devalues purchasing power over time. It also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Proponents are aiming for all 50 states to accept gold as currency. They believe the Fed would be nullified if that happens. As a result, deficit spending would stop, and individual financial freedom would increase.

Former US Representative Ron Paul said, “We ought not to tax money – and that’s a good idea. It makes no sense to tax money. Paper is not money, it’s fraud.”2 Americans are losing faith in the Fed as its policies are inflicting pain on every aspect of daily life. Voters are reaching a tipping point. They are feeling empowered to throw off the Federal Reserve. If that happens, the price of gold will most likely skyrocket. Demand for gold will dramatically increase. And soaring interest rates will no longer hold the price of gold down. Until gold becomes currency, investors can still reap the benefits of owning precious metals. A Gold IRA from American Hartford Gold can protect retirement funds from Fed-created threats like inflation, recession, and bank failures. Contact us today at 800-462-0071.

Notes:
1. https://worldpopulationreview.com/state-rankings/gold-and-silver-legal-tender-states
2. https://blog.tenthamendmentcenter.com/2023/03/arkansas-bill-would-make-gold-and-silver-legal-tender-in-the-state/

• Recent bank failures are second only to the 2008 Financial Crisis
• Continued interest rate hikes are causing bank instability and recession
• Investors seek safe haven assets like precious metals to shield wealth

Bank Failures Threaten to Decimate Portfolio Value

The largest banking crisis since the 2008 Financial Crisis is still shaking the global economy. Economists and investors are worried about the solvency of major banks around the world. They fear that bank failures will keep spreading until the entire financial system is in jeopardy.

The spark that lit the failure was the Fed’s aggressive interest rate hikes. Powell raised rates nine times since Biden took office, with another hike expected next month. The Fed feels compelled to raise rates to tame the record inflation caused by trillions of new government spending.

Each rate hike widens the cracks in the financial system. Tech, real estate, and now banks are all collapsing. Max Baecker, President of American Hartford Gold, said, “Interest rate hikes have eroded the value of bank assets such as government bonds and mortgage-backed securities. Since SVB failed, Americans have moved over $500 billion from smaller lenders into big banks. And that causes more instability.”

The Fed created a perfect trap for themselves. If they keep raising rates, the economy breaks down and a recession is inevitable. JP Morgan said that we’re past the point of no return to avoid a recession. And if the Fed cuts rates, inflation can become permanent, and we may never see an end to rising prices.

There is a level of uncertainty not seen since the Great Depression. In response, investors are flocking to safe haven assets like precious metals. Gold and silver retain their value independent of the banking system and don’t have counterparty risk.

Contact us today at 800-462-0071 to learn how you can protect your funds with precious metals or a Gold IRA.

• JP Morgan Chase stated that avoiding a recession is almost impossible after the banking crisis
• The Fed raised rates only 25 points and shifted their policy in response to the banks
• Leading investors advise moving into safe haven assets before a massive drop in the market

Recession Seems Inevitable

In the wake of the banking crisis, JP Morgan Chase issued a warning that we are “past the point of no return” to avoid a recession. The economy is facing a prolonged downturn for several reasons. Accessing money is harder, banks are feeling worried, and the stock market is heading for a meltdown.¹

Despite the recent rescue of several U.S. banks, markets remain unsettled. Bank of America surveyed global fund managers. They said a “systemic credit event” is now seen as the biggest threat to markets.²

The Federal Reserve announced a rate hike of 25 points. They are conducting a delicate balancing act. They must contain inflation without causing further damage to the banks. The Fed made notable changes in their policy statement. They shifted away from “ongoing increases” to the policy rate to “some additional firming.” Fed officials tried to reassure investors that the “U.S. banking system is sound and resilient.”³

But JPMorgan strategists warn that it may be too little, too late. They said that the banking chaos will likely affect the decisions of the Federal Reserve for a long time. Even if central bankers contain contagion, the damage has been done. Pressure from both markets and regulators is going to tighten credit markets and drive stock prices down.

We could be facing a potential “Minsky moment.” That is the theory that extended bull markets result in major collapses. The US experienced an extended bull market from 2009 through 2020 that was revived in 2021. We seem overdue for a collapse.

Banking Crisis Speeds Economic Collapse

Jeremy Grantham is a renowned investor and co-founder of the investment firm GMO. He warned conditions are amplifying a bursting “everything bubble.” This will cause a recession and plunge the S&P 500 by up to 50%. The current bubble includes stocks, bonds, and real estate. These investments reached unsustainable highs during the pandemic.

Grantham predicts a bear market could persist until deep into next year. He notes that the dot-com crash only caused a mild recession. In this recession, the S&P 500 could slump by around 24% to roughly 3,000 points. But in a worst-case scenario, it could tumble below its pandemic low to around 2,000 points. Graham sees the economy tanking after May. Unemployment will rise, growth will slow, and corporate profits will fall.⁴

The warnings from JPMorgan Chase & Co. and Jeremy Grantham should not be taken lightly. They suggest that the global economy is teetering on the brink of disaster. A recession is imminent. Economic fundamentals can deteriorate for years before they finally bottom out. Investors need to be prepared for what could be a long and difficult period ahead.

JPMorgan analysts advise being cautious on risk assets. Investors should be defensive in portfolio allocation. They suggest that now is not the time to take chances. Geopolitics are still weighing heavily on securities. Instead, investors should pursue safe haven assets that can recession-proof their portfolios. Contact us today to learn how a Gold IRA can protect your wealth during this economic upheaval.

Notes:
1. https://www.marketwatch.com/story/dont-dream-its-over-top-jp-morgan-strategist-warns-of-looming-market-meltdown-as-easy-credit-disappears-c24f80be
2. https://www.marketwatch.com/story/dont-dream-its-over-top-jp-morgan-strategist-warns-of-looming-market-meltdown-as-easy-credit-disappears-c24f80be
3. https://www.cnbc.com/2023/03/22/live-updates-fed-rate-march.html
4. https://markets.businessinsider.com/news/stocks/stock-market-house-prices-bubble-crash-outlook-recession-jeremy-grantham-2023-3