With little progress after weeks of negotiations among lawmakers, Americans are still bracing for the looming deadline for US debt default – which could be as early as June 1.
There is no precedent for a default, so it is difficult to predict exactly what the outcome will be. Experts have speculated that exceeding the debt ceiling maturity could be a “disaster” for the economy, with a recession and market turmoil imminent.
Some investors have already started to shift some of their portfolios to gold this year, amid rising interest rates, slow inflation and the possibility of a recession on the horizon. But with the debt crisis adding even more uncertainty into the mix, you might be wondering if gold is right for you too.
Here’s what to know about the ways gold protects your money and why it could be a good idea to consider today. Before you begin, explore all your gold investing options now with a free information kit.
How Gold Can Help Protect Your Money
While the exact result of the The United States defaults on its debt is impossible to predict, there are a few characteristics of gold that might make it a good option for worried investors.
Gold can help you diversify
Although there are many options for diversify your investments, choosing an asset like gold has unique advantages during times of uncertainty. This is because its price tends to move regardless of what other markets are doing.
As recently stated by Mel Mattison, CFP, financial services professional and consultant CBS News“Gold often moves to the beat of his own drummer.”
No matter what happens with the economy, diversification is a proven strategy for maintaining a strong portfolio over time. When you diversify, you spread your risk. So when a market is down, only part of your overall investments may suffer while other assets, like gold, can help keep your portfolio afloat.
Learn more about diversifying with gold by requesting a free investment guide today.
Gold is often a safe bet during economic downturns
Gold can be an especially interesting investment during a recession or downturns.
Analyzes from the Congressional Budget Office and the U.S. Treasury Department recently found that simply crossing the debt threshold “could cause significant disruptions in financial markets that would adversely affect economic conditions faced by households and businesses.” companies”. The length of default can be a big factor in the depth of the recession and the magnitude of the market impact, but gold has two advantages against potential swings.
For a, gold price tend to move independently of the stock market. Take last year, for example. While the S&P 500 saw an overall decline, gold prices not only held steady, but even rose slightly.
Additionally, gold prices tend to do well when the value of the dollar is falling. Banking uncertainty has already pushed the price of the U.S. dollar lower this year, but economists say a default could further weaken the currency across the broader global economy. If this happens, gold can be a safe haven investment to help you maintain your purchasing power despite volatility.
The price of gold could rise further
Gold has already risen in value this year, hitting near all-time highs and stabilizing around the $2,000 mark.
Even amid ongoing debt crisis negotiations, strategists are optimistic about gold price value over the next few months and even next year. Analysts at major companies ranging from the Wells Fargo Investment Institute to UBS’s Chief Investment Office to JP Morgan have all put their faith in the continued rise in gold prices. These experts predict that gold could still hit new all-time highs this year, hitting $2,200 an ounce next spring and $2,400 by the end of 2024.
The bottom line
If you’re looking for options to protect your money in the event of a US debt default, gold can be an asset to consider today. Diversification, in general, is a good investment strategy in any economic environment. But diversifying with gold can be a safe bet during the economic turmoil a debt crisis could bring since its price has historically tended to hold steady during recessions and rise when the value of the US dollar declines.
If you’re considering adding gold to your investment portfolio, explore your options with a free investor kit.