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Gold to Surge as Dedollarization Accelerates

Gold to Surge as Dedollarization Accelerates

Dedollarization Momentum Builds The global financial landscape is undergoing a seismic shift. The long-standing belief in the stability of the US dollar is being challenged. Stubborn inflation, bank failures, and the looming debt ceiling crisis are causing people to question a currency backed only by the “full faith and credit” of the US government. As … Read more

The Retirement Crisis: Record-High Debt and Depleted Savings

The Retirement Crisis: Record-High Debt and Depleted Savings
  • Studies show Americans are unprepared for retirement due to record inflation and household debt
  • The gap in retirement savings could become trillion-dollar liability for the government
  • Retirement planners should seek safe haven assets to make sure their funds are there when they need them

Retirement at Risk

The future of retirement for many Americans is becoming increasingly uncertain. Record debt and persistent inflation are hurting Americans’ retirement prospects. These endangered retirements hold potential consequences for the entire economy. People should be taking measures now to safeguard their future.

A survey by the Certified Financial Planner Board identified American’s main financial concerns. Sixty percent of Americans worry about purchasing necessities such as food and clothing. A further 55% worry about paying rent or a mortgage. And 69% worry about preparing for retirement.

The biggest challenge to preparing for retirement was debt. Those under 45 and those over were just as likely to withdraw money from a retirement account. “These past several years have not been easy for Americans,” CFP Board CEO Kevin R. Keller said in a statement. “From the pandemic to the latest banking news, uncertainty has been prevalent.”1

Household debt has reached an unprecedented level of $17 trillion. It increased $2.9 trillion since pre-pandemic 2019. Mortgages typically drive household debt. But new mortgages dropped due to high interest rates. Mortgage debt saw a decline of 62% compared to the previous year. Yet, credit card debt reached a record-breaking $986 billion. A 17% jump from last year, this is the first time in two decades it hasn’t gone down after the holidays. This surge in debt shows the financial strain experienced by many Americans. More and more, people are relying on credit cards to cope with rising costs.2

Household debt and credit development3

Cost to the Economy

The number of financially vulnerable individuals aged 65 and above is expected to increase. From 2020 to 2040, the number is predicted to rise 43%. Alarmingly, approximately 56 million private sector workers lack access to employer-sponsored retirement plans. Many households are left with limited options for building enough retirement funds. Numerous Americans will be facing a lower quality of life during their retirement years.4

The Pew Research Center says the shortage of retirement savings could cost the government $1.3 trillion by 2040. This savings gap could place an immense strain on state and federal budgets. There will be a greater proportion of elderly individuals compared to the working-age population. The expense of Medicare and other programs is expected to be borne by a smaller portion of the workforce. The extra public funding could result in higher taxes. Analysts estimate the projected shortfall would cost $13,600 per household.5

Several states are recognizing the urgent need to address the retirement crisis. They have launched automated savings programs. They allow individuals to set up state-sponsored Individual Retirement Accounts (IRAs). These initiatives are proving successful. Enrollees are saving between $105 and $190 per month. Some analysts believe such initiatives could help reduce the burden on public resources.6

Challenging Economic Landscape

The National Retirement Risk Index highlights the economic challenges faced by working-age households. It shows that about half of the nation’s households may struggle to maintain their standard of living in retirement. One third of households are taking a major hit from the increase in Social Security’s full retirement age. The economy had a period of improvement after the Great Recession. But the uncertainty caused by the pandemic and inflationary pressures undid those gains for many people.

The Retirement Crisis: Record-High Debt and Depleted Savings

Inflation’s Impact on Retirement Funds

A survey by the Senior Citizens League found inflation is wiping out retirement funds. The percentage of retirees reporting a drain on their savings rose from 20% in the third quarter of 2022 to 26% in the first quarter of 2023. Moreover, a record-high 45% carried credit card debt for more than 90 days.7

“Retirees exhaust retirement savings as they age, but it looks like inflation has sped up the process,” Mary Johnson, a Social Security and Medicare policy analyst at the Senior Citizens League said.8

Record household debt, insufficient retirement savings, and persistent inflation are making retirement planning essential. The strain on retirement funds shows the need for individuals to seek safe-haven assets that can protect their wealth. A Gold IRA can provide a hedge against inflation and safeguard retirement funds in an uncertain economic climate. By taking acting now, individuals can work towards ensuring a more stable and prosperous retirement future. Call American Hartford Gold today at 800-462-0071 to learn more.

Notes:
1. https://www.foxbusiness.com/personal-finance/americans-prioritize-retirement-savings
2. https://qz.com/americans-are-still-using-credit-cards-to-buy-necessiti-1850440401
3. https://qz.com/americans-are-still-using-credit-cards-to-buy-necessiti-1850440401
4. https://401kspecialistmag.com/retirement-savings-gap-could-create-1-3-trillion-burden-by-2040/
5. https://401kspecialistmag.com/retirement-savings-gap-could-create-1-3-trillion-burden-by-2040/
6. https://401kspecialistmag.com/retirement-savings-gap-could-create-1-3-trillion-burden-by-2040/
7. https://www.foxbusiness.com/personal-finance/americans-prioritize-retirement-savings
8. https://www.foxbusiness.com/personal-finance/americans-prioritize-retirement-savings

The Quiet Bank Run: Seeking Stability Amidst Uncertainty

The Quiet Bank Run: Seeking Stability Amidst Uncertainty

Depositors Flee Traditional Banks Over the past 13 months, $1 trillion has flowed out of traditional bank accounts. This massive movement of funds has raised concerns about the stability of the banking system. Individuals are exploring ways to safeguard their money. Rising interest rates and failing banks are sending depositors to higher-yielding alternatives. One such … Read more

Inflation Lingers, Gold Jumps

Inflation Lingers, Gold Jumps
  • The latest Consumer Price Index shows inflation is slowing down but far from over
  • Coupled with the banking crisis, the Federal Reserve may pause any future interest rate hikes
  • Gold is increasing in price, with analysts predicting potential new highs

New Data Shows Persistent Inflation

The latest Consumer Price Index report shows that while inflation may be decelerating, it is bound to linger in our economic landscape well into the foreseeable future. The index rose 4.9% in April from a year earlier. This marks the 10th straight month of easing inflation. Yet, inflation remains historically high despite the slight easing, with a recent peak of 9.1% in June 2022. US stocks opened higher, the dollar fell, and US Treasury prices rose in response to the data. But consumers are still suffering in essential areas, while Federal Reserve policy and the price of gold react to the new information.1

Rising prices of shelter, gasoline, and used cars contributed to the inflation numbers. Shelter costs, contributing to 40% of core inflation, rose by 0.4% in April and 8.1% over the past year. Gasoline prices spiked after a decrease in March. The rise was driven by OPEC+ oil producers’ announcement of further oil output cuts. Used car and truck prices increased by 4.4% in April, reversing previous declines. The cost of groceries fell slightly, but food prices are still higher compared to a year ago.2

Core prices, excluding food and energy, rose for the fifth consecutive month. Economists consider core prices as a better predictor of future inflation. In the 12 months through April, the core CPI increased by 5.5%, showing strong underlying inflation.3

“Inflation has moved beyond sticky at this point and after three months of core CPI hanging above 5%, it’s become tenacious,” said Robert Frick, corporate economist with Navy Federal Credit Union. “Given the biggest contributor to high CPI once again was shelter, and home sales prices have hit their own plateau, we may not see significant drops in CPI until this fall.”4

Inflation over the decade 5

Federal Reserve

Analysts believe the new CPI data is giving the Federal Reserve room to alter their policy. The Federal Reserve has been raising interest rates aggressively to combat inflation. The Fed’s rate increases have had significant effects on mortgage rates, auto loans, credit card borrowing, and business loans. Economists fear the rate hikes are driving the country into recession and fueling a recent wave a bank failures.

Even with the downward trend, inflation is still well above the Fed’s 2% target. “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go,” Fed Chair Powell said. The CPI report suggests a potential need for rates to remain high for longer than anticipated, according to economists.6

The Federal Reserve recently raised interest rates to the highest level in 16 years. This is its fastest monetary policy tightening campaign since the 1980s. The Fed has hiked its policy rate by 500 basis points since March 2022. But the language in their statement suggested a possible pause in further increases. The Fed will weigh various factors to determine the need for future rate hikes.7

Powell indicated that the Fed has yet to decide whether to suspend rate hikes but acknowledged the possibility. He said Fed will take a data-dependent approach moving forward. In a statement after its latest policy meeting, the Fed removed a sentence from its previous statement that had said “some additional” rate hikes might be needed. It replaced it with language that said it will now weigh a range of factors in “determining the extent” to which future hikes might be needed.8

Inflation Lingers, Gold Jumps

Gold

Gold prices rallied after the CPI report came in close to market expectations. Gold’s uptrend depends on a weaker U.S. dollar and lower interest rates. Some analysts believe gold could reach record highs due to a pause on interest rate hikes, debt ceiling concerns, and China’s continuing buying spree. China is expanding its gold reserves and potentially reducing its holdings of US Treasuries in favor of gold.

Edward Morse is the global head of commodities strategy at Citi Research. He predicts gold prices will eventually reach $2,400 an ounce. Citigroup is bullish on gold but emphasizes the need for patience and acknowledges the choppy road ahead. He said, “The gold prices are really an anticipation of what’s going to happen to interest rates and what’s going to happen to the US dollar. Clearly, there is a lot of money to be made.”9

The latest Consumer Price Index information holds both promise and pitfalls. Consumers should brace for elevated inflation to become a fact of life. However, there is now more cause for the Federal Reserve to pivot from its course of aggressive rate hikes. Even more so in the face of a spreading bank crisis and a looming recession. With gold positioned to rise, now is an opportune time to safeguard your portfolio with precious metals. A Gold IRA from American Hartford Gold can not only secure your wealth from inflation but can also potentially grow it. Contact us today at 800-462-0071 to learn more.

Notes:
1. https://www.foxbusiness.com/economy/cpi-inflation-april-2023
2. https://www.foxbusiness.com/economy/cpi-inflation-april-2023
3. https://www.reuters.com/markets/us/us-consumer-prices-increase-solidly-april-2023-05-10/
4. https://www.foxbusiness.com/economy/cpi-inflation-april-2023
5. https://www.foxbusiness.com/economy/cpi-inflation-april-2023
6. https://nypost.com/2023/05/10/consumer-price-index-rose-5-5-in-april-as-fed-weighs-more-rate-hikes/
7. https://www.reuters.com/markets/us/us-consumer-prices-increase-solidly-april-2023-05-10/
8. https://nypost.com/2023/05/10/consumer-price-index-rose-5-5-in-april-as-fed-weighs-more-rate-hikes/
9. https://www.kitco.com/news/2023-05-09/Gold-s-recent-push-near-all-time-highs-was-just-a-test-run-as-Citigroup-s-Morse-sees-prices-hitting-2-400.html

Stagflation Fears Rise

Stagflation Fears Rise

Economic Indicators Point to Stagflation As inflation remains stubborn and growth continues to slow, the threat of stagflation is causing economists to sound the alarm. Last seen in the 1970s, stagflation wreaks havoc on the economy and can ruin retirement funds. Past episodes of stagflation have weighed heavily on stocks. The S&P 500 fell an … Read more

Looming Debt Ceiling Disaster

Looming Debt Ceiling Disaster
  • The US government is hitting its debt ceiling and will soon be unable to pay its bills
  • Experts say there will be an economic catastrophe if the debt ceiling isn’t raised
  • Gold prices are surging as investors seek safe havens

US Hits it Debt Limit

The United States government is quickly approaching its debt limit. The US could default on its debt as early as June 1, meaning the country would run out of money to pay its bills. Americans could face an economic catastrophe if the debt ceiling isn’t raised. Treasury Secretary Janet Yellen warned there would be dire consequences, including job losses, big cuts to retirement savings, and a severe economic downturn.

What is the Debt Limit?

The debt limit is the maximum amount of debt that the federal government is allowed to borrow to keep paying for programs already mandated by Congress. The US hit the debt limit of $31.4 trillion in January. Since then, the Treasury Department has been using “extraordinary measures” to keep the government running.

What Happens if the US Defaults on its Debt?

If the debt ceiling is not raised, it could lead to an economic disaster. The Joint Economic Committee found that a default could cost Americans $20,000 in retirement savings.1 Moody’s Analytics estimates that a default could lead to 2.6 million job losses and cause the stock market to plunge by one-third, erasing $15 trillion in household wealth. Social security beneficiaries might not receive their monthly checks.2

Interest rates would rise even higher. Kathleen Day is a business lecturer at Johns Hopkins University. “The cost to borrow for homes, cars and credit cards would explode,” she said in an email. “In short, default would cause mayhem.” Consumers are already struggling with higher borrowing costs due to the Fed’s record pace of interest hikes. A stalled housing market would get even worse.3

What is the Current Situation?

The House passed Speaker McCarthy’s bill to raise the debt ceiling by $1.5 trillion or through March 31, 2024, whichever comes first. The bill included $4.5 trillion in spending cuts, including banning student loan forgiveness, and adding work requirements to welfare programs. However, the bill is unlikely to pass the Democrat-controlled Senate and White House.4

Looming Debt Ceiling Disaster

Has This Happened Before?

In 2011, Congress narrowly resolved the debt ceiling. Despite a last-minute deal, the stock market went down 14% over four weeks. Because of the crisis, debt-rating agency Standard & Poor’s downgraded the US debt for the first time.5

What is the Impact on Gold?

During the 2011 debt ceiling crisis, gold hit $1,900 an ounce for the first time. It then reached a record high at the time of $1,910 an ounce. Today, gold is aiming to surpass $2,020 as its safe haven appeal grows alongside debt ceiling worries. An extension in the US debt ceiling could result in a downgrade of the US long-term outlook. This would have a negative impact on the US Dollar, Treasury yields, and the S&P 500, all of which can drive the price of gold higher.6

The government is playing a dangerous game of brinkmanship with the economy. If the debt ceiling isn’t resolved, retirement funds may drop off a cliff. People looking to protect the value of their funds should investigate gold. Call us at 800-462-0071 to learn how a Gold IRA can safeguard the value of your portfolio.

Notes:
1. https://www.businessinsider.com/what-happens-if-congress-doesnt-raise-debt-ceiling-jobs-retirement-2023-5
2. https://www.businessinsider.com/what-happens-if-congress-doesnt-raise-debt-ceiling-jobs-retirement-2023-5
3. https://www.cbsnews.com/news/debt-limit-ceiling-impact-on-your-finances-social-security-medicare-401k/
4. https://www.businessinsider.com/what-happens-if-congress-doesnt-raise-debt-ceiling-jobs-retirement-2023-5
5. https://www.cbsnews.com/news/debt-limit-ceiling-impact-on-your-finances-social-security-medicare-401k/
6. https://www.fxstreet.com/news/gold-price-forecast-xau-usd-eyes-above-2-020-as-white-house-needs-to-raise-us-debt-ceiling-sooner-202305030353

Destructive Interest Rates to Rise Even Higher

Destructive Interest Rates to Rise Even Higher

Expect Another Interest Rate Hike Despite the current banking crisis, the Federal Reserve is on track to raise interest rates again. Officials are debating if one more hike will be enough to pause the fastest rate-raising cycle in 40 years. The forecasted quarter percentage point increase would lift rates to a 16-year high. The intentional … Read more

3rd Major Bank Collapses – Crisis Continues

Crisis Continues: First Republic Bank Collapses
Crisis Continues: First Republic Bank Collapses

 

  • First Republic Bank collapsed, following the failures of Silicon Valley and Signature Bank
  • Analysts point to rapid interest rate hikes as the cause of the collapse
  • To safeguard against a threatened financial system, investors are turning to gold

First Republic Bank Collapse

The banking crisis continued as First Republic Bank collapsed. JPMorgan Chase is set to take on “all of the deposits and substantially all of the assets of First Republic Bank” after the Federal Deposit Insurance Corporation (FDIC) confirmed that the troubled bank had collapsed on Monday.

First Republic was America’s 14th largest bank as of the end of 2022. Its demise follows the collapse of Signature Bank and Silicon Valley Bank – the 2nd and 3rd largest bank failures in American history. First Republic had lost more than $100 billion of deposits in the first quarter of the year. The losses sent investors and regulators into panic mode.1

Prior to the collapse, eleven larger banks had previously infused $30 billion of deposits into First Republic to buy some of its assets at above-market rates. But there was no saving the bank.

First Republic’s appeal for a government bailout failed. Instead, the government worked to protect depositors. The FDIC said, “All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.”2

Analysts are laying the blame for the collapse on Fed Chair Jerome Powell and Treasury Secretary Janet Yellen. The bank carried billions in unrealized losses, due in part to its book of mortgages that were issued when rates were significantly lower. Rapidly rising interest rates decimated the value of First Republic’s holdings. The collapse of SVB and Signature, for the same reason, sparked a run on First Republic and its ultimate demise.

Effects of the Failure

Experts don’t believe the banking crisis will divert Fed policy. Inflation is still much too high, as the most recent GDP report showed. Hence, the Fed is still likely to hike rates at their next meeting, further endangering hundreds of other at-risk banks.

The bigger issue is how far will the banking crisis spread and how it will ripple throughout the economy. Almost 200 more banks are on the brink of collapse, including financial giant Deutsche Bank.3,4 Cascading effects could include banks tightening credit. This could make it harder for people to get mortgages or credit cards, and for businesses to get loans. And that could lead to an even worse outcome – a prolonged and severe recession. 5

As the banking crisis threatens to destabilize the global financial system, the price of gold is predicted to hit all-time highs.6 As a result, Americans are facing a severe recession and a drastic loss in their savings. People who want to preserve the value of their funds should look to safe haven assets that exist independent of the banking system. To learn how precious metals within a Gold IRA can safeguard your retirement, contact us today at 800-462-0071.

Notes:
1. https://www.reuters.com/markets/us/white-house-monitoring-situation-first-republic-could-step-if-needed-2023-04-27/
2. https://abcnews.go.com/amp/Business/jpmorgan-chase-assume-deposits-republic-bank/story?id=98979305
3. https://theweek.com/finance/1021940/nearly-200-banks-at-risk-of-svb-type-collapse-study-finds
4. https://finance.yahoo.com/news/deutsche-bank-next-fall-worried-133438711.html
5. https://www.sfchronicle.com/tech/article/first-republic-bank-collapse-recession-17845950.php
6. https://www.cnbc.com/2023/03/22/gold-price-could-hit-high-amid-svb-credit-suisse-bank-problems.html

More Signs Point to Recession

More Signs Point to Recession

  • In a rare admission, the Federal Reserve stated that a recession is likely in 2023
  • A recession forecast is supported by several strong economic indicators
  • Stocks will most likely fall further before they hit a bottom

Recession Predicted

Already stressed by banking turmoil, markets are dropping as the latest economic indicators point to a recession. In a rare admission, the federal government stated that we could be facing a downturn. The Federal Open Market Committee (FOMC) makes key decisions about interest rates and the growth of the United States money supply. They expect a recession before the end of 2023 based on several factors.

The FOMC isn’t alone in their prediction. The New York Fed’s Recession Probabilities Model suggests the odds of a downturn are at their highest since 1982. The model’s April reading shows a 57.7% chance of a recession. Their forecast matches private sector predictions. JP Morgan Chase says the chance of a US recession is greater than 50% before the end 2023.1

Recession Indicators

Debt Ceiling – The deadline to raise the debt ceiling is rapidly approaching. Weak tax receipts may cause the Treasury to be unable to pay all the US obligations earlier than expected. If the debt ceiling isn’t lifted, an unprecedented default would result in a government shutdown and risk triggering a deep recession.2

Leading Economic Index – The Conference Board is a research organization. It counts over 1,000 public and private corporations and other organizations as members. Their Leading Economic Index (LEI) broadly tracks business cycles using 10 inputs from across areas such as manufacturing, unemployment, and interest rate spreads. The LEI saws its sharpest reversal on record outside of a recession dating back to the 1950s. Wells Fargo economists said it presents a “clear message” that a downturn remains ahead.3

Bond Yield Inversion – An inversion is when short-term Treasuries pay more than long-term Treasuries. It typically occurs when investors lose confidence in the economy. An inversion has preceded every recession since 1955. Today’s yield curve is more steeply inverted than it has been at any other point since 1960. A recession typically occurs about one year after an inversion. The curve first inverted in March 2022, which means we are due for a recession soon.4

Shrinking M2 Money Supply – The M2 money supply is a measure for how much cash is circulating throughout the national economy. It tumbled from this time last year.

Steve Hanke is a Professor of Applied Economics at Johns Hopkins University. He thinks “a U.S. recession is baked in the cake.” And said, “Due to the Fed’s monetary mismanagement, the M2 money supply is falling at its fastest rate since the 1930s. The quantity theory of money tells us that, with a 6–18-month lag after M2 drops, economic activity will slump.”5

Some government officials did push back on the idea that we are entering a recession. Treasury Secretary Yellen said the US economy will avert of downturn. However, her prediction track record isn’t exactly perfect. Last year, Yellen had said there would only be a “small risk” of inflation, and that it would be “manageable.” To which she recently commented, “Well, look, I think I was wrong then about the path that inflation would take.”6

More Signs Point to Recession

What It Can Mean

Since 1948, bear markets have started before the onset of a recession. The National Bureau of Economic Research has yet to officially declare a recession. Therefore, the S&P 500 could reach new lows in the near term. No bear market in the last 75 years has reached its bottom before the beginning of a recession.

Billionaire GMO cofounder Jeremy Grantham said, “This one is pretty damn big. It’s bigger than 2000, because it includes real estate and bonds, and that one did not. The economy had a gentle recession. It had no problem with real estate. It had no problem with markdown of debt. And yet, the Nasdaq went down 82%, Amazon went down 92%, and the S&P went down 50%. Be advised, this is not a gentle setback like 2000.”7

Powerful signs are pointing towards a severe recession. People who are interested in protecting the value of their portfolios should investigate the benefits of precious metals. A Gold IRA from American Hartford Gold can safeguard your wealth through an extended economic downturn. Call us today at 800-462-0071 to learn more.

Notes:
1. https://markets.businessinsider.com/news/stocks/recession-economy-downturn-markets-conference-fed-inflation-stocks-business-cycle-2023-4
2. https://www.brookings.edu/2023/01/25/how-worried-should-we-be-if-the-debt-ceiling-isnt-lifted/
3. https://markets.businessinsider.com/news/stocks/recession-economy-downturn-markets-conference-fed-inflation-stocks-business-cycle-2023-4
4. https://www.fool.com/investing/2023/04/22/recession-indicator-been-100-accurate-since-1955/
5. https://www.theepochtimes.com/recession-risk-grows-after-money-supply-shrinks-at-fastest-pace-since-great-depression_5187430.html?welcomeuser=1
6. https://www.nbcnews.com/business/economy/treasury-secretary-janet-yellen-admits-was-wrong-inflation-rcna31416
7. https://markets.businessinsider.com/news/stocks/jeremy-grantham-stock-market-crash-real-estate-everything-bubble-recession-2023-3

Biden Rule Punishes Home Buyers

Biden Rule Punishes Home Buyers

“Socialism for Homeowners” A new rule from the Biden administration will make it harder for people with good credit to buy homes. The rule goes into effect on May 1. People with good credit will be forced to pay more each month to subsidize the cost of mortgages for higher-risk borrowers. Experts are concerned about … Read more

Record Gold Buying Continues

Record Gold Buying Continues

 

  • 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

Record Gold Buying Continues

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/

Sell Now! Warn Financial Experts

Sell Now! Warn Financial Experts

Sell Before Market Collapses US stock market experts are warning investors to sell now. They see the S&P 500 index taking a significant hit in the coming months. The index has risen about 8% in 2023. It rose on investor hopes of the Federal Reserve easing their tight monetary policy. However, financial leaders predict that … Read more