S&P 500 in Correction Territory
The S&P 500, a major U.S. equities index, has experienced a decline of more than 10% since its peak on July 31. This drop is attributed to growing concerns about a possible recession in the U.S. economy. Analysts have described this as the first correction since the market hit its lowest point in the fourth quarter of 2022. In contrast, the prices of safe haven assets such as gold and bitcoin have been on the rise.
Mounting Fears of Recession
The S&P 500 index has now dropped to 4,117 points, marking a decline of just over 10% from its peak on July 31, when it reached 4,577 points. Similarly, the Dow Jones Industrial Average ended the last week of October 2023 with a 1.7% decrease, closing at just under 32,420 points. These downward trends in both indices occurred shortly after reports surfaced that the yield on 10-year U.S. Treasury notes had exceeded 5% for the first time since 2007.
Media reports have described the S&P 500 decline as a movement towards correction territory, with experts like Jim Bianco of Bianco Research in agreement. Bianco, who has been warning about the global economy post-COVID, stated that this is the first time the market has reached a bottom since October 2022.
Market Correction or Big Deal?
Despite the significant correction in the S&P 500, there has been a lack of attention from the media. Bianco expressed surprise at the absence of alarming headlines regarding this decline, suggesting that it is not currently viewed as a major concern. However, he also warned that if the decline continues, it may eventually become a significant issue.
According to a CNBC report, all three major U.S. stock indices experienced losses ranging from 2.1% to 2.6% in the week ending on October 27. These losses were attributed, in part, to disappointing earnings reports from major corporations such as Ford and Chevron.
The Rise of Safe Haven Assets
In addition to the flight to "safe" U.S. Treasuries, investors have shown an increasing interest in gold. The price of gold has surpassed $2,000 per ounce for the first time since May, indicating a growing demand for this safe haven asset. Interestingly, the decline in U.S. equities has coincided with a surge in the price of bitcoin (BTC), which has experienced its best performance in 2023.
Bitcoin.com News reported that BTC has surpassed the $35,000 mark for the first time since March 2022. This surge in the price of the top cryptocurrency is believed to be driven by speculation that the U.S. Securities and Exchange Commission (SEC) will approve spot bitcoin exchange-traded funds (ETF).
Some crypto enthusiasts argue that the rise of BTC, similar to that of gold, may be attributed to fears of an economic downturn in the U.S. that could resemble the recession of 2008.
What are your thoughts on this story? Let us know in the comments section below.
Frequently Asked Questions
How much gold should you have in your portfolio?
The amount you make will depend on the amount of capital you have. For a small start, $5k to $10k is a good range. As you grow, it is possible to rent desks or office space. This will allow you to pay rent monthly, and not worry about it all at once. Only one month's rent is required.
Also, you need to think about the type of business that you are going to run. My website design company charges clients $1000-2000 per month depending on the order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
You won't get a monthly paycheck if you work freelance. This is because freelancers are paid. Therefore, you might only get paid one time every six months.
You must first decide what kind and amount of income you are looking to generate before you can calculate how much gold will be needed.
I recommend starting with $1k-$2k of gold and growing from there.
How much of your portfolio should you hold in precious metals
To answer this question we need to first define precious metals. Precious Metals are elements that have a very high relative value to other commodities. This makes them extremely valuable for trading and investing. Gold is currently the most widely traded precious metal.
However, many other types of precious metals exist, including silver and platinum. While gold's price fluctuates during economic turmoil, it tends to remain relatively stable. It is also relatively unaffected both by inflation and deflation.
In general, prices for precious metals tend increase with the overall marketplace. However, the prices of precious metals do not always move in sync with one another. The price of gold tends to rise when the economy is not doing well, but the prices of the other precious metals tends downwards. Investors expect lower interest rates which makes bonds less appealing investments.
In contrast, when the economy is strong, the opposite effect occurs. Investors want safe assets such Treasury Bonds and are less inclined to demand precious metals. Because they are rare, they become more pricey and lose value.
Diversifying across precious metals is a great way to maximize your investment returns. Furthermore, because the price of precious Metals fluctuates, it is best not to focus on just one type of precious Metals.
How is gold taxed by Roth IRA?
The tax on an investment account is based on its current value, not what you originally paid. If you invest $1,000 into a mutual fund, stock, or other investment account, then any gains are subjected tax.
If you place the money in a traditional IRA, 401(k), or other retirement plan, there is no tax when you take it out. You pay taxes only on earnings from dividends and capital gains — which apply only to investments held longer than one year.
These rules vary from one state to another. Maryland's rules require that withdrawals be taken within 60 days after you turn 59 1/2. In Massachusetts, you can wait until April 1st. New York is open until 70 1/2. To avoid penalty fees, it is important to plan and take distributions in time to pay all your retirement savings.
Should You Buy or Sell Gold?
Gold was a safe investment option for those who were in financial turmoil. Many people today are moving away from stocks and bonds to look at precious metals, such as gold, as a way to diversify their investments.
Gold prices have been on an upward trend over recent years, but they remain relatively low compared to other commodities such as oil and silver.
Some experts believe that this could change very soon. They believe gold prices could increase dramatically if there is another global financial crises.
They also point out that gold is becoming popular because of its perceived value and potential return.
If you are considering investing in gold, here are some things that you need to keep in mind.
- First, consider whether or not you need the money you're saving for retirement. You can save for retirement and not invest your savings in gold. The added protection that gold provides when you retire is a good option.
- Second, be sure to understand your obligations before you purchase gold. Each type offers varying levels and levels of security.
- Keep in mind that gold may not be as secure as a bank deposit. You may lose your gold coins and never be able to recover them.
So, if you're thinking about buying gold, make sure you do your research first. Make sure to protect any gold you already own.
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
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Tips for Investing in Gold
Investing in Gold is a popular investment strategy. There are many advantages to investing in Gold. There are many ways you can invest in gold. Some people prefer to buy gold coins in physical form, while others prefer to invest in gold ETFs.
You should consider some things before you decide to purchase any type of gold.
- First, check to see if your country permits you to possess gold. If your country allows you to own gold, then you are allowed to proceed. Otherwise, you can look into buying gold from abroad.
- You should also know the type of gold coin that you desire. You can go for yellow gold, white gold, rose gold, etc.
- Thirdly, it is important to take into account the gold price. Start small and build up. You should diversify your portfolio when buying gold. Diversify your investments in stocks, bonds or real estate.
- Last but not least, remember that gold prices fluctuate frequently. Be aware of the current trends.
By: Terence Zimwara
Title: Gold and BTC Prices Rise as Key US Equities Index Declines
Sourced From: news.bitcoin.com/as-gold-and-btc-rise-key-us-equities-index-now-down-by-over-10-from-july-31-peak/
Published Date: Sun, 29 Oct 2023 16:30:01 +0000