Federal Reserve Chair Jerome Powell's recent remarks have sparked a debate on the sufficiency of current interest rates in an uncertain economic landscape. Despite strong gross domestic product growth, Powell's address indicated the Fed's firm stance, as he expressed uncertainty about the effectiveness of its restrictive policies.
Federal Reserve Chair Acknowledges Uncertainty Regarding the Impact of Interest Rate Policies
During an International Monetary Fund (IMF)-hosted event in Washington D.C., Jerome Powell candidly expressed, "We know that ongoing progress toward our 2 percent goal is not assured". He also mentioned that inflation has been unpredictable. Powell emphasized the Fed's readiness to further tighten policies if necessary, aiming to curb inflationary pressures and achieve the 2% goal.
While Powell's hawkish sentiment affected the market, with major indices experiencing declines, gold prices remained stable. Crypto assets, such as Bitcoin (BTC), showed strength by approaching the $38,000 mark before retracing. The Russell 2000 saw the most significant drop at 1.57%, followed by the Nasdaq (down 0.94%), the Dow Jones (down 0.65%), and the S&P 500 (down 0.81%). The New York Stock Exchange (NYSE) closed 0.76% lower.
Powell elucidated the enigmatic nature of the current inflationary period, which originated from unexpected shifts in demand and labor supply caused by the Covid-19 pandemic. Despite a temporary decrease in core PCE inflation, Powell highlighted its resurgence towards the end of 2021, exacerbated by a tight labor market and robust household demand, intensifying inflationary pressures.
According to Powell, "[A] response of monetary policy to higher prices stemming from an adverse supply shock should be attenuated because it would otherwise amplify the unwanted decline in employment." However, he also emphasized the potential consequences of aggressively responding to passing price increases, as it could exacerbate macroeconomic volatility without ensuring price stability.
Meanwhile, the 10-year Treasury note has remained steady at 4.636, experiencing a 0.98% increase over the past five days. Manish Kabra, a strategist at Societe Generale SA in London, commented on the impact of Powell's statement, stating that the trading consensus has shifted regarding the peak of the US 10-year yield for the year. Consequently, risk assets that rallied in recent weeks are reassessing the potential scenario of the US 10-year yield reaching 5%.
What are your thoughts on the recent speech by the Fed chairman? Feel free to share your opinions in the comments section below.
Frequently Asked Questions
Can I have physical gold in my IRA
Gold is money and not just paper currency. It is an asset that people have used over thousands of years as money, and a way to protect wealth from inflation and economic uncertainties. Investors use gold today as part of their diversified portfolio, because it tends to perform better in times of financial turmoil.
Many Americans today prefer to invest in precious metals, such as silver and gold, over stocks and bonds. Even though owning gold is not a guarantee of making money, there are many reasons why you might want to add gold to your retirement savings portfolio.
Another reason is that gold has historically outperformed other assets in financial panic periods. Between August 2011 to early 2013, gold prices rose close to 100 percent while the S&P 500 fell 21 per cent. Gold was one of the few assets that performed better than stocks during turbulent market conditions.
One of the best things about investing in gold is its virtually zero counterparty risk. Even if your stock portfolio is down, your shares are still yours. You can still own your gold even if the company where you invested fails to pay its debt.
Finally, the liquidity that gold provides is unmatched. You can sell your gold at any time without worrying about finding a buyer, which is a major advantage over other investments. The liquidity of gold makes it a good investment. This allows you to take advantage of short-term fluctuations in the gold market.
How much gold should you have in your portfolio?
The amount of money you need to make depends on how much capital you are looking for. For a small start, $5k to $10k is a good range. You could then rent out desks and office space as your business grows. So you don't have all the hassle of paying rent. Only one month's rent is required.
Consider what type of business your company will be running. In my case, I am running a website creation company, so we charge clients around $1000-2000/month depending on what they order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
Freelance work is not likely to pay a monthly salary. The project pays freelancers. This means that you may only be paid once every six months.
You need to determine what kind or income you want before you decide how much of it you will need.
I recommend starting with $1k-$2k in gold and working my way up.
Should You Invest in gold for Retirement?
How much money you have saved, and whether or not gold was an option when you first started saving will determine the answer. You can invest in both options if you aren't sure which option is best for you.
You can earn potential returns on your investment of gold. This makes it a worthwhile choice for retirees.
Most investments have fixed returns, but gold's volatility is what makes it unique. Its value fluctuates over time.
However, it doesn't necessarily mean that you shouldn't invest your money in gold. This just means you need to account for fluctuations in your overall portfolio.
Another advantage to gold is that it can be used as a tangible asset. Gold is less difficult to store than stocks or bonds. It is also easily portable.
Your gold will always be accessible as long you keep it in a safe place. Physical gold is not subject to storage fees.
Investing in gold can help protect against inflation. Because gold prices tend to rise along with other commodities, it's a good way to hedge against rising costs.
It's also a good idea to have a portion your savings invested in something which isn't losing value. Gold rises in the face of a falling stock market.
Gold investment has another advantage: You can sell it anytime. You can also liquidate your gold position at any time you need cash, just like stocks. It doesn't matter if you are retiring.
If you do decide to invest in gold, make sure to diversify your holdings. Don't put all of your eggs in one basket.
Do not buy too much at one time. Begin by buying a few grams. Next, add more as required.
Don't expect to be rich overnight. Instead, the goal is to accumulate enough wealth that you don't have to rely on Social Security.
Gold may not be the most attractive investment, but it could be a great complement to any retirement strategy.
Statistics
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
External Links
bbb.org
irs.gov
law.cornell.edu
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement accounts
forbes.com
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How To
The History of Gold as an Asset
Gold was a currency from ancient times until the early 20th century. It was universally accepted and loved for its beauty, durability, purity and divisibility. Because of its intrinsic value, it was also widely traded. There were different measures and weights for gold, as there was no standard to measure it. For example, in England, one pound sterling was equal to 24 carats of silver; in France, one livre tournois was equal to 25 carats of gold; in Germany, one mark was equal to 28 carats of gold; etc.
In the 1860s the United States began issuing American currency made up 90% copper (10% zinc) and 0.942 gold (0.942 pure). This caused a drop in foreign currency demand which resulted in an increase of their prices. In this period, large amounts of gold coin were minted by the United States, which caused the gold price to drop. The U.S. government was unable to pay its debts due to too much money being in circulation. They sold some of their excess gold to Europe to pay off the debt.
Because most European countries did not trust the U.S. dollar, they started accepting gold as payment. However, many European nations stopped using gold to pay after World War I and started using paper currency instead. Since then, the price of gold has increased significantly. Even though gold's price fluctuates, it is still one of the most secure investments you could make.
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By: Jamie Redman
Title: Fed Chair Powell’s Hawkish Tone Rattles Markets as Inflation Concerns Persist
Sourced From: news.bitcoin.com/fed-chair-powells-hawkish-tone-rattles-markets-as-inflation-concerns-persist/
Published Date: Fri, 10 Nov 2023 17:30:30 +0000
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