Mounting Fears of US Recession
The S&P 500, a key U.S. equities index, has experienced a decline of just over 10% from its peak on July 31. This drop has been driven by concerns about the U.S. economy heading towards a recession. Experts have even referred to this decline as the first correction since the market hit rock bottom in the fourth quarter of 2022. Interestingly, the prices of safe haven assets like gold and bitcoin have been on the rise amidst these market fluctuations.
S&P 500 Enters Correction Territory
The S&P 500 index has now fallen by more than 10% from its peak of 4,577 points on July 31. Similarly, the Dow Jones Industrial Average ended the last week of October 2023 with a 1.7% decrease, closing just below 32,420 points. The decline of both indices occurred shortly after reports surfaced that the yield on 10-year U.S. Treasury notes had surpassed 5%, a level not seen since 2007.
Many media reports have described the S&P 500 decline to 4,117 points as a movement into correction territory. Experts, including Jim Bianco of Bianco Research, who has been closely monitoring the post-COVID world economy, agree with this assessment. In a recent post, Bianco noted that this is the first time the market has bottomed out since October 2022.
"The S&P 500 has now corrected 10% from its July 31 peak. This is the first such correction since the market bottomed on October 12, 2022. I'm surprised I see no screaming red headlines about this. It tells me it is not viewed as a big deal. Then … the decline will continue until it becomes a big deal," warned Bianco.
A CNBC report revealed that all three major U.S. stock indices experienced losses ranging from 2.1% to 2.6% in the week ending on October 27. The report attributed these losses to poor earnings reports from corporate giants such as Ford and Chevron.
Flight to Safe Haven Assets
Prior to the correction, economists had warned that the rising yield on U.S. Treasury notes would make them more attractive than equities. This shift in preference would lead to a flight of capital from equities to U.S. Treasuries, depriving companies of crucial investment funds and raising borrowing costs.
In addition to seeking refuge in U.S. Treasuries, investors have also turned to gold, driving its price above $2,000 per ounce for the first time since May. Interestingly, the so-called correction in U.S. equities has coincided with a surge in bitcoin (BTC), which is experiencing its best performance in 2023.
Bitcoin.com News reported that BTC crossed the $35,000 mark for the first time since March 2022. This surge has been attributed to speculation that the U.S. Securities and Exchange Commission (SEC) will approve spot bitcoin exchange-traded funds (ETF).
Some crypto enthusiasts believe that BTC's rise, similar to that of gold, is linked to fears of an imploding U.S. economy that could potentially plunge into a recession, reminiscent of the 2008 financial crisis.
What are your thoughts on this story? Let us know in the comments section below.
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How To
The best way online to buy gold or silver
First, understand the basics of gold. Gold is a precious metal similar to platinum. It's very rare and is used as money because of its durability and resistance to corrosion. It's hard to use, so most people prefer buying jewelry made out of it to actual bars of gold.
Today, there are two types available in gold coins: one is legal tender and the other is bullion. Legal tender coins are those that are intended for circulation in a country. They typically have denominations of $1, $5 or $10.
Bullion coins can only be used as investment currency. They increase in value due to inflation.
They cannot be used in currency exchanges. A person can buy 100 grams of gold for $100. The buyer receives 1 gram of gold for every dollar spent.
The next thing you should know when looking to buy gold is where to do it from. You have a few options to choose from if you are looking to buy gold directly through a dealer. First off, you can go through your local coin shop. You might also consider going through a reputable online seller like eBay. You might also consider buying gold from an online private seller.
Private sellers are individuals who offer gold for sale, either at wholesale prices or retail prices. When selling gold through private sellers, you pay a commission fee of 10% to 15% per transaction. This means that you will get less back from a private seller than if you sell it through a coin shop or on eBay. This is a great option for gold investing because you have more control over the item’s price.
Another option for buying gold is to invest in physical gold. While physical gold is easier than paper certificates to store, you still need to make sure it is safe. To ensure that your physical gold remains safe, you need to secure it in an impenetrable container such as a vault or safety deposit box.
A bank or pawnshop can help you buy gold. A bank will be able to provide you with a loan for the amount of money you want to invest in gold. Small establishments that allow customers to borrow money for items they have brought are called pawnshops. Banks typically charge higher interest rates than pawn shops.
Another way to purchase gold is to ask another person to do it. Selling gold is also easy. Contact a company such as GoldMoney.com, and you can set up a simple account and start receiving payments immediately.
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