A potential Covid vaccine made markets soar last week. However, record numbers of new daily Covid Cases are keeping investors grounded to safe haven investments
Hopeful news about a potential Covid vaccine sent stock markets soaring, however, we’re still seeing record numbers in the US of over 100,00 new daily cases, causing investors to maintain a cautious disposition towards the market.
Gold and silver prices initially took a hit amid hopes of a return to normal but soon rallied given renewed aversions to market instability risk. Truthfully, the economic uncertainty has been around well before the spread of the coronavirus pandemic, so while the trifecta of Americans’ overwhelming financial struggles, spreading pandemic, and stock market volatility have plagued our economy this year, here are a few more reasons why the road to recovery will be an uphill battle:
Stimulus and Expiring Benefits – Millions of Americans remain unemployed and receive increased unemployment benefits due to Covid Aid Packages which are set to end in December. New Stimulus proposals are back on the table but it is uncertain what they will entail. Endless stimulus, however, can’t continue to be an ongoing remedy. Households remain in limbo as people are spending beyond their means in hopes of receiving further bailouts. This will lead to further disastrous bankruptcies or defaults.
Corporate Bankruptcy – Coronavirus lockdowns have wreaked havoc on a variety of business sectors, predominantly retail due to lack of consumerism as well as fitness facilities due to close contact. Major players from J Crew to JC Penney’s and 24 Hour Fitness to Gold’s Gym have all filed for chapter 11 and the list keeps growing. Small to medium-sized companies that make up for 50% of businesses have shut down at a higher rate from restaurants to salons to local specialty stores. Once they were forced to shut down temporarily, many were unable to reopen their doors. While larger corporations make the headlines, the smaller ones are suffering quietly, and at the end of the day, these numbers amount to hundreds of thousands more unemployed and unable to pay living expenses, as well as personal and business debts.
Endless Debt – The Fed has been pumping trillions into the financial system in an effort to help Americans repay their personal and corporate debts. However, with more than 50% of corporate and personal debt accrued and no end of coronavirus cases in sight, the ability for most companies and individuals to repay those debts have become increasingly scarce.
The corporate debt bubble in itself has deteriorated so much over the years as investors who could at one point expect a near 50% loss, are now set to see a 99% loss become the norm.
Dollar Collapse – while the government is trying its hardest to keep the dollar strong, the Fed’s beefed-up money creation is doing the exact opposite. With the second round of stimulus in place, the Fed will soon expand its balance sheet by a few more trillion increasing the national debt to well above $30 Trillion. The massive debt, currently at over $27 trillion and counting, will further incentivize increased debt creation to pay off the interest on the debt, leading to a never-ending vicious cycle that will continue to weaken the dollar in the process and further destabilize our economy.
Political Turmoil – The transition is not going smoothly, to say the least. Trump refuses to concede, delaying the necessary transition process and causing added stress on national security. Higher tax rates are also anticipated, as Biden plans for significant tax hikes on income taxes and social security. Biden’s promise to “equalize the network of retirement saving tax breaks” essentially aims to level the playing field by eliminating the tax advantages currently enjoyed by retirement savings accounts and replacing them with a “credit” or “match.”
Repaving Your Road To Retirement
All in all, the road to retirement may be filled with some bumps along the way. Headlines about the burdening debt thanks to a decade of low-interest rates and potential trade wars with Europe and China were among the top economic threats leading up to the lockdown in March. We didn’t fully understand or want to believe the devastating impact this pandemic would have but it goes to show that we’re in a highly vulnerable financial predicament. And no one wants to be a Monday morning quarterback in times of an economic collapse which is why it’s crucial to protect your retirement savings so they don’t lose 50% of their value in the next crisis like many did after the 2008 crisis as well as those still struggling to get through this one.
The easiest, most effective way to protect your assets is through diversification. Quite simply, you can’t put all your eggs in one basket. Seeing what happened during the last market crash, savvy investors now know that rolling over their existent 401K or traditional IRA to a self-directed Gold IRA, enables them to allocate a portion of their retirement savings to safe-haven investments like precious metals to balance their investment risk. The benefits of having gold in silver in your portfolio are that they have not only historically maintained their value but have a proven track record of soaring throughout the years, particularly in times of economic turmoil. Over the last 20 years, gold has increased 500%, with a 250% jump since the 2008 crash. This year it surged 25% breaking new records amid the global health crisis and is poised to resume its sharp incline to new record highs.
Adding gold to your retirement accounts is safe and efficient. Not only does it allow you to properly diversify with assets that are not correlated to the market for effective portfolio hedging but you’re unlimited by the amount you can invest and have something special to pass on from generation to generation.
Whether rolling over an existent retirement account to a gold IRA or purchasing minted coins to grow your wealth, the possibilities of protecting your investments are endless. To learn more about the best ways to secure your retirement savings, contact an Allegiance Gold Account Executive today!