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As if the US economy hasn’t had enough trouble this year, it now faces a potential debt ceiling crisis.
Treasury Secretary Janet Yellen recently warned lawmakers“A review of recent federal tax receipts suggests that unless Congress raises or suspends the debt ceiling before then, we will not be able to continue meeting all of our government obligations by early June, and no sooner. Our best estimate is that it could be June 1st.” “
If the United States defaults, it will not be able to pay its bills, shake up the world’s financial markets and what happens as a result Yellen predicts It would be an “economic and financial catastrophe”.
With this news, it’s no surprise investors are worried about protecting their funds if the worst happens.in gold becoming more and more popular This year, investors are looking to protect their portfolios from persistent inflation and other economic troubles. With this latest concern on the horizon, will it continue to be a smart investment going forward? We asked the experts.
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US Debt Default Impact on Gold
The debt ceiling crisis will have wide-ranging fiscal implications. Here’s how it might affect your gold investment.
Panic can be prevented
When the economic news is dire, gold is shiny. In the event of a debt crisis, investors will continue to look to gold to protect their money from the aftermath.
“For those genuinely concerned about the possibility of a U.S. debt default, gold is probably the best hedge in times of panic,” says Noah Damsky, CFA and principal at Marina Wealth Advisors. . “In times of stress, Treasuries can be our go-to, but when stress is directly related to Treasuries, Treasuries may not act as the cushion we thought they would. US Treasuries are risky, so gold could be a good short-term hedge” at the center of the storm. ”
Whether or not the debt ceiling crisis materializes, economic panic is sure to rise again.To Add gold to your portfolio Starting today, you can easily get rid of such fears.
Its value will probably stabilize
Gold has been used as a reliable store of value for centuries. are less subject to the whims of market forces than assets such as stockwould be a good way Protect your portfolio from loss.can also function as reliable source of cash When the dollar’s purchasing power plummeted.
This makes it a solid investment at all times, but especially when the crisis is imminent.
“Investing in gold can be a wise decision in times of economic uncertainty, especially with respect to the national debt ceiling,” said CFP’s Hannah Horvath. “Gold is typically a stable asset that retains its value over the long term. Precious metals are often immune to inflation and currency fluctuations, making them a go-to choice for investors looking to protect their assets. Given its liabilities, gold may prove to be a wise investment choice.”
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Prices may continue to rise
gold price reached close to historic highs That trend is likely to continue even if the U.S. defaults.
“We believe the extremely high levels of U.S. debt and rising budget deficit could ultimately lead to a credit crisis that will dramatically increase the price of gold,” said Wealthrace president and owner. CFA’s Doug Carey said. If the Federal Reserve were created to buy the debt…the price of gold would rise even more. ”
Because gold is best thought of as: long term investmentit is worth considering as much as you want. A high price simply indicates that demand for it is growing, and economic conditions make it particularly valuable.
Conclusion
Debt ceiling negotiations at an impassegold remains An investment worth considering.
”[I]If the U.S. were to default, investing in gold would definitely be a smart investment for several reasons,” said Jeffrey Wood, CFP, CFP and partner at Lyft Financial. Investors usually move to gold as a safe investment. It tends to retain value over the long term against inflation and currency depreciation, making it good for diversification and increasing demand. It is highly liquid and could be very valuable should the US default. ”
That said, as with any financial decision, it’s important to do your research and take your specific goals and needs into consideration.
“Whenever I work with clients, I take great care to ensure that the recommendations I make are prudent in light of their risk tolerance, time horizon and overall financial plans.” says Wood. When in doubt, consult your financial advisor for guidance that is best for your situation.
