Gold Prices Rise Amid Looming Credit Crunch

Weakening US Dollar Drives Gold Surge

The recent surge in gold prices can be attributed to the weakening of the US dollar, rather than a sudden increase in gold demand. The drop in the value of the fiat currency was primarily caused by the release of October's Consumer Price Index (CPI) report. Similar to the previous month, the report indicated slower growth and lower-than-expected inflation. As a result, some experts are urging the Federal Reserve to not only pause its rate hikes but also do so earlier than anticipated. While the gold price experienced a minor decline due to a slight recovery in the US dollar, the fact that it did not drop significantly highlights the strong support it continues to receive from CPI and Producer Price Index (PPI) reports.

US Government Avoids Shutdown

The US government narrowly avoided a shutdown when the Senate passed a bill in a race against time to reach a deal. While we could delve into the details of the agreement, it has become a recurring event that requires explanation each time it occurs. Therefore, we won't provide a detailed account of the deal.

Federal Reserve SLOOS Report Indicates Tightening Lending Standards

Looking beyond the official data releases, it is essential to consider the Federal Reserve's Senior Loans Officer Opinion Survey (SLOOS) report. The report suggests an ongoing tightening of lending standards. While this may seem like a responsible approach, it is important to note that the US economy, like other major economies, relies heavily on credit. If cautious lending practices lead to a decrease in actual lending, it could potentially trigger a credit crunch and subsequently a recession. This would mark a stark end to a year that began with significant turmoil in the banking sector.

UK Inflation Slows, Stagnation Looms

In the UK, there was cause for celebration as October's inflation figures revealed a slowdown in price growth. However, subsequent growth figures indicated that the economy is facing a prolonged period of stagnation with minimal growth.

US-China Relations and Currency Wars

The recent meeting between President Biden and Xi Jinping garnered significant attention, particularly after Biden referred to Jinping as a 'dictator' immediately following the meeting. For years, the US and China have been key players in currency wars, a term that dominated economic news prior to the pandemic. Although the term has faded from headlines, currency wars will persist as long as fiat currencies remain dominant. Currently, there seems to be a temporary lull in the longstanding battle between the US and China. The US dollar is still viewed as the preferred reserve currency, and China continues to hold its reserves in dollars. The Treasury's bi-annual currency report did not label China as a 'currency manipulator' as it has done in the past.

Future Outlook: A Return to Economic Growth Battle

While China's previous accusations of currency manipulation by the US may not be entirely forgotten, it is not currently the primary focus of currency management. China has always taken a deliberate approach to policy implementation, prioritizing the strengthening of its reserves with gold and stabilizing the renminbi rather than devaluing it against competitor currencies. Given China's weakened economic growth over the past year and the possibility of Trump's re-election, it is likely that both countries will resume their battle for economic growth supremacy.

The article "Gold Pops as Credit Crunch Looms" was originally published on GoldCore News.

Frequently Asked Questions

Can the government take your gold

The government cannot take your gold because you own it. It’s yours, and you earned it by working hard. It belongs to your. This rule may not apply to all cases. You can lose your gold if you have been convicted for fraud against the federal governments. If you owe taxes, your precious metals could be taken away. However, even if you don’t pay your taxes, your gold can be kept as property of the United States Government.

How much should I contribute to my Roth IRA account?

Roth IRAs allow you to deposit your money tax-free. These accounts are not allowed to be withdrawn before the age of 59 1/2. However, if you do decide to take out some of your contributions before then, there are specific rules you must follow. First, your principal (the original deposit amount) cannot be touched. This means that no matter how much you contribute, you can never take out more than what was initially contributed to this account. You must pay taxes on the difference if you want to take out more than what you initially contributed.

The second rule states that income taxes must be paid before you can withdraw earnings. So, when you withdraw, you’ll pay taxes on those earnings. Consider, for instance, that you contribute $5,000 per year to your Roth IRA. Let’s also assume that you make $10,000 per year from your Roth IRA contributions. The federal income tax on your earnings would amount to $3,500. That leaves you with only $6,500 left. Since you’re limited to taking out only what you initially contributed, that’s all you could take out.

So, if you were to take out $4,000 of your earnings, you’d still owe taxes on the remaining $1,500. Additionally, half of your earnings would be lost because they will be taxed at 50% (half the 40%). You only got back $4,000. Even though you were able to withdraw $7,000 from your Roth IRA,

There are two types: Roth IRAs that are traditional and Roth. Traditional IRAs allow for pre-tax deductions from your taxable earnings. When you retire, you can use your traditional IRA to withdraw your contribution balance plus interest. You have the option to withdraw any amount from a traditional IRA.

Roth IRAs won’t let you deduct your contributions. Once you are retired, however, you may withdraw all of your contributions plus accrued interest. There is no minimum withdrawal amount, unlike traditional IRAs. You don’t need to wait until your 70 1/2 year old age before you can withdraw your contribution.

How much gold should you have in your portfolio?

The amount of money you need to make depends on how much capital you are looking for. A small investment of $5k-10k would be a great option if you are looking to start small. You could then rent out desks and office space as your business grows. This will allow you to pay rent monthly, and not worry about it all at once. You just pay per month.

Also, you need to think about the type of business that you are going to run. In my case, I run a website-creation company. Our clients pay us between $1000-2000/month and depending on their order. You should also consider the expected income from each client when you do this type of 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 need to determine what kind or income you want before you decide how much of it you will need.

I recommend starting with $1k-$2k in gold and working my way up.

Should You Buy Gold?

In the past, gold was considered a haven for investors during economic 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.

The gold price has been in an upward trend for the past few years, but it remains relatively low compared with other commodities like silver or oil.

Experts believe this could change soon. They say that gold prices could rise dramatically with another global financial crisis.

They also mention that gold is becoming more popular due to its perceived worth and potential return.

If you are considering investing in gold, here are some things that you need to keep in mind.

  • Before you start saving money for retirement, think about whether you really need it. It is possible to save enough money to retire without investing in gold. Gold does offer an extra layer of protection for those who reach retirement age.
  • Second, you need to be clear about what you are buying before you decide to buy gold. Each offers varying levels of flexibility and security.
  • Last but not least, gold doesn’t provide the same level security as a savings account. Losing your gold coins could result in you never being able to retrieve them.

You should do your research before buying gold. Protect your gold if you already have it.

Do you need to open a Precious Metal IRA

Before opening an IRA, it is important to understand that precious metals aren’t covered by insurance. If you lose money in your investment, nothing can be done to recover it. This includes investments that have been damaged by fire, flooding, theft, and so on.

Protect yourself against this type of loss by investing in physical gold or silver coins. These items can be lost because they have real value and have been around for thousands years. If you were to sell them today, you would likely receive more than what you paid for them when they were first minted.

Consider a reputable business that offers low rates and good products when opening an IRA. You should also consider using a third party custodian to protect your assets and give you access at any time.

When you open an account, keep in mind that you won’t receive any returns until your retirement. Keep your eyes open for the future.

Statistics

  • You can only purchase gold bars at least 99.5% purity. (forbes.com)
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item’s value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
  • (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)
  • Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
  • Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)

External Links

cftc.gov

finance.yahoo.com

wsj.com

irs.gov

How To

How to keep physical gold in an IRA

The best way to invest in Gold is by purchasing shares of companies that produce it. But, this approach comes with risks. These companies may not survive the next few years. Even if they survive, there’s always the risk that they will lose money due fluctuations in gold prices.

Alternative options include buying physical gold. You can either open an account with a bank, online bullion dealer, or buy gold directly from a seller you trust. These options offer the convenience of easy access, as you don’t need stock exchanges to do so. You can also make purchases at lower prices. It is easier to view how much gold has been stored. So you can see exactly what you have paid and if you missed any taxes, you will get a receipt. You also have a lower chance of theft than stocks.

There are also some drawbacks. You won’t get the bank’s interest rates or investment money. Additionally, you won’t be able diversify your holdings. You will remain with the same items you bought. Finally, the taxman might want to know where your gold has been placed!

If you’d like to learn more about buying gold in an IRA, visit the website of BullionVault.com today!

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By: Dave Russell
Title: Gold Prices Rise Amid Looming Credit Crunch
Sourced From: news.goldcore.com/gold-pops-as-credit-crunch-looms/
Published Date: Thu, 16 Nov 2023 12:40:08 +0000

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