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In August, the price of Bitcoin and Ethereum both fell by over 11 percent. While many onlookers saw a market correction on the horizon, the magnitude of the sell-off took some by surprise.
All the while, the stock market continued its summer dip into September. After Labor Day, markets opened 1.25 percent lower than where they stood 30 days prior. And given that September is infamously the worst-performing month of the year for stocks, there is not much room for optimism in the weeks ahead.
The good news, however, is that precious metals have once again proven their utility as a safe haven store of value. While other assets suffered considerable price dips in August, both gold and silver managed to make modest gains of over one percentage point.
Market Snapshot: September 6, 2023
- Inflation Rate: 3.2%
- Fed Rate: 5.30% to 5.5%
- Gold Price: US$1,951/oz.
- Silver Price: $23.84/oz.
- Bitcoin Price: US$25,589
- Ethereum Price: US$1,623
While the broader U.S. economy seems to be maintaining stability despite several concerning macroeconomic indicators, concerns still remain. The substantial structural issue presented by American household student debt and record-high credit card debt (to the tune of over $2.7 trillion combined) could soon become too burdensome to ward off recessionary effects.
Massive credit card debt signifies that many Americans are struggling with their day-to-day finances. High-interest rates on credit card balances can cripple household budgets, leaving individuals with less disposable income for spending and investments. As this debt burden grows, it could lead to increased default rates, negatively affecting banks and financial institutions. If the trend continues, it may trigger a domino effect, causing a downturn in consumer spending, job losses, and even a potential recession.
The resumption of student loan repayments is like a ticking time bomb for the economy. With over $1.8 trillion in outstanding student loan debt, the resumption of payments will divert billions of dollars away from discretionary spending and investments. This diversion of funds towards creditors could lead to a reduction in consumer spending that could result in decreased business revenue, layoffs, and lower corporate earnings, ultimately impacting stock markets and investor portfolios.
And despite an uptick in inflation to 3.2 percent, monetary policymakers are still signaling the possibility of another rate hike slated for September 20. If rates rise above their generationally high level of 5.5 percent, it may not be long before a long-term bear market takes shape.
The future direction of the markets in the latter half of 2023 remains uncertain. However, if we consider factors such as job reductions, corporate earnings, interest rates, and debt levels, the outlook may not be particularly favorable.
When it comes to risk-managed investments, it’s crucial to stay ahead of the curve. To safeguard your wealth and tap into significant growth potential, it’s worth considering diversification through cryptocurrencies and precious metals within a self-directed individual retirement account (SDIRA).
SDIRAs are tax-advantaged accounts capable of holding recession-resistant assets such as gold, silver, platinum, and much more. These assets have demonstrated their resilience in the first half of 2023, leaving room for speculation about the heights they might reach in the coming months.
To get started investing in recession-ready precious metals, contact one of our top-ranked gold IRA companies today.
Liam Hunt, M.A., is a financial writer covering global markets, monetary policy, retirement savings, and millennial investing. His commentary and analysis have been featured in the New York Post, Reader's Digest, Fox Business, and Forbes.
