S&P 500 in Correction Territory
The S&P 500, the key U.S. equities index, has experienced a decline of just over 10% from its peak on July 31. This drop is attributed to growing concerns about a potential recession in the U.S. economy. Experts view this decline as the first correction since the market reached its lowest point in the fourth quarter of 2022. In contrast, the prices of safe haven assets such as gold and bitcoin have been on the rise.
Mounting Fears of Recession
Fears of an impending recession have caused the S&P 500 index to drop by just over 10% from its peak of 4,577 points on July 31. Similarly, the Dow Jones Industrial Average ended the last week of October 2023 1.7% lower, closing at just under 32,420 points. This decline in both indices occurred shortly after reports surfaced that the yield on 10-year U.S. Treasury notes had exceeded 5% for the first time since 2007.
The decline of the S&P 500 to 4,117 points has been characterized by several media reports as a movement into correction territory. Experts, including Jim Bianco of Bianco Research, who have been closely monitoring the U.S. economy, agree with this assessment and believe that this trend will continue until it becomes a significant concern. Bianco, who has been warning about the post-COVID global economy, stated on a social media platform that this is the first time the market has seen a bottoming since October 2022.
Concerns Over Poor Earnings Reports
According to a CNBC report, all three major U.S. stock indices experienced losses ranging from 2.1% to 2.6% in the week ending on October 27. These losses have been attributed to disappointing earnings reports from corporate giants such as Ford and Chevron.
However, prior to this correction, economists had warned that the rising yield on U.S. Treasury notes would make them more attractive compared to equities. This shift in preference would lead to a capital flight from equities to U.S. Treasuries, depriving companies of crucial investment funds and increasing borrowing costs.
Rise of Safe Haven Assets
In addition to seeking refuge in U.S. Treasuries, investors are increasingly turning to gold, as evidenced by its rise above $2,000 per ounce for the first time since May. Interestingly, the so-called correction in U.S. equities has coincided with a surge in the price of bitcoin (BTC), which is experiencing its best performance in 2023.
BTC recently surpassed the $35,000 mark, a level not seen since March 2022. This surge in the leading cryptocurrency's value has been linked to speculation that the U.S. Securities and Exchange Commission (SEC) will approve spot bitcoin exchange-traded funds (ETF).
Some cryptocurrency enthusiasts argue that the rise in BTC, similar to that of gold, may be driven by fears of an economic implosion in the U.S. and the potential for a recession similar to the one experienced in 2008.
What are your thoughts on this story? Let us know in the comments section below.
Frequently Asked Questions
What are the advantages of a gold IRA
An Individual Retirement Account (IRA) is the best way to put money towards retirement. It's tax-deferred until you withdraw it. You can decide how much money you withdraw each year. There are many types available. Some are better suited for people who want to save for college expenses. Some are better suited for investors who want higher returns. For example, Roth IRAs allow individuals to contribute after age 59 1/2 and pay taxes on any earnings at retirement. These earnings don't get taxed if they withdraw funds. This account may be worth considering if you are looking to retire earlier.
An IRA with a gold status is like any other IRA because you can put money into different asset classes. Unlike a regular IRA which requires taxes to be paid on gains as you wait to withdraw them, a IRA with gold allows you to invest in multiple asset classes. People who prefer to save their money and invest it instead of spending it are well-suited for gold IRAs.
An additional benefit to owning gold through an IRA, is the ease of automatic withdrawals. You won't have the hassle of making deposits each month. To make sure you don't miss any payments, you can also set up direct deductions.
Finally, the gold investment is among the most reliable. Because it's not tied to any particular country, its value tends to remain steady. Even in economic turmoil, gold prices tends to remain relatively stable. It is therefore a great choice for protecting your savings against inflation.
How much should your IRA include precious metals
It's important to understand that precious metals aren't only for wealthy people. It doesn't matter how rich you are to invest in precious metals. There are many ways to make money on silver and gold investments without spending too much.
You might consider purchasing physical coins, such as bullion bars and rounds. It is possible to also purchase shares in companies that make precious metals. You may also be interested in an IRA transfer program offered by your retirement provider.
You can still get benefits from precious metals regardless of what choice you make. These metals are not stocks, but they can still provide long-term growth.
Their prices are more volatile than traditional investments. So, if you decide to sell your investment down the road, you'll likely see more profit than you would with traditional investments.
What is the tax on gold in Roth IRAs?
The tax on an investment account is based on its current value, not what you originally paid. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
However, if the money is deposited into a traditional IRA/401(k), the tax on the withdrawal of the money is not applicable. Only earnings from capital gains and dividends are subject to tax. These taxes do not apply to investments that have been held for more than one year.
The rules that govern these accounts differ from one state to the next. Maryland's rules require that withdrawals be taken within 60 days after you turn 59 1/2. In Massachusetts, you can wait until April 1st. And in New York, you have until age 70 1/2 . To avoid penalties, you should plan ahead and take distributions as soon as possible.
How much gold should your portfolio contain?
The amount that you want to invest will dictate how much money it takes. You can start small by investing $5k-10k. You could then rent out desks and office space as your business grows. This will allow you to pay rent monthly, and not worry about it all at once. You only pay one month.
It's also important to determine what type business you'll run. In my case, I run a website-creation company. Our clients pay us between $1000-2000/month and depending on their order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
Because freelance work pays freelancers, you won't likely get a monthly income if you do freelance work. You may get paid just once every 6 months.
You need to determine what kind or income you want before you decide how much of it you will need.
I suggest starting with $1k-2k gold and building from there.
Can the government seize your gold?
Because you have it, the government can't take it. It is yours because you worked hard for it. It is yours. However, there may be some exceptions to this rule. Your gold could be taken away if your crime was fraud against federal government. You can also lose precious metals if you owe taxes. However, even if taxes are not paid, gold is still your property.
Statistics
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (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
law.cornell.edu
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement account
bbb.org
forbes.com
finance.yahoo.com
How To
A rising trend in gold IRAs
Investors seek diversification and protection against inflation by using gold IRAs.
The gold IRA allows owners to invest in physical gold bullion and bars. It is tax-free and can be used by investors who aren't concerned about stocks and bond.
An investor can use a gold IRA to manage their assets and not worry about market volatility. The gold IRA can be used to protect against inflation or other potential problems.
Investors also have the benefit of physical gold, which has unique properties such durability, portability and divisibility.
In addition, the gold IRA offers several other advantages, including the ability to quickly transfer ownership of the gold to heirs and the fact that the IRS does not consider gold a currency or a commodity.
This means that investors who are looking for financial safety and security are becoming more interested in the gold IRA.
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By: Terence Zimwara
Title: Gold and BTC Rise as Key US Equities Index Drops Over 10% from July 31 Peak
Sourced From: news.bitcoin.com/as-gold-and-btc-rise-key-us-equities-index-now-down-by-over-10-from-july-31-peak/
Published Date: Sun, 29 Oct 2023 16:30:01 +0000
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