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The novel coronavirus has caused mass uncertainty in financial markets as many countries saw spikes and outbreaks through the month of July. Currently, there are over 4.3 million confirmed cases of Covid-19 in the United States alone.
FAANG companies in Silicon Valley are almost single-handedly keeping the U.S. equities market afloat. Tesla (TSLA), one of this year’s runaway success stories, currently has a 300x P/E ratio—meaning investors expect the share to make 300 times its earnings.
The numbers in the stock market simply aren’t sustainable. Whether the equities market is inflated is a matter of debate, but its precariousness is not.
In July, the U.S. monthly budget deficit skyrocketed to a record $864 billion following massive federal government spending to stimulate an economy rocked by shutdowns. Still, over half of American small businesses report fearing that they might have to permanently close.
Some experts fear that we’re staring down a potential economic collapse. There’s no way to know for sure in today’s unprecedented market environment.
July has also seen its share of silver linings. On July 28, the price of gold hit an all-time high at $1,938 per troy ounce. Similarly, July saw the price of bitcoin (BTC) eclipse $11,000 for the first time in months.
In July, investors flocked to safe haven assets to protect their hard-earned wealth. Amid massive uncertainty and market volatility, precious metals and cryptocurrencies are seen as a hedge against systemic risks that won’t be going away any time soon.
Today’s investment environment is more precarious than it’s been in years. That’s why it’s crucial that you diversify your portfolio to mitigate risk in the months ahead. Consider perusing our reviews of highly-vetted cryptocurrency IRA companies and precious metals IRA companies to get a start on your diversification journey.
Mark Turner is an author and editor at Sophisticated Investor. He has over two decades of experience in the financial industry as a broker in both Chicago and New York and has written for several top tier publications. He currently covers the topics of alternative investments, geopolitical events, US economy, portfolio diversification and others.
