Special Edition from Augusta Precious Metals:
Update on Market Drops
Also: Cryptocurrency Woes
A couple of weeks ago, the S&P 500 index plummeted into a correction at the fastest rate in history. It was stunning. But it was a mere warmup for the volatility that followed. Last Wednesday, the Dow officially fell into a bear market at the fastest rate since the Great Depression. The remaining major indexes also found themselves in bear territory by the end of Thursday. Things only grew worse as this week began. Markets plummeted again on Monday despite the Fed cutting interest rates to zero the day before. The Dow fell nearly 3,000 points, or 12.9%, during the trading session. It was the worst single-day performance of the Dow since 1987’s Black Monday, and the 3rd-worst trading session of all-time.
It appears no end is in sight to the misery plaguing markets right now. Experts say we are only at the beginning of the deadly COVID-19 pandemic. During a Monday press conference, President Trump said he’d been advised the outbreak could last until August – maybe longer.
Augusta wants to help you stay well-informed at this unique time in history. This week’s Touchpoint presents the latest round of coronavirus-related news items for watchful retirement savers. Watch your inbox for ongoing information and announcements.
- Last week brought a growing consensus among observers that the Federal Reserve would move to zero interest rates at its planned meeting this Tuesday and Wednesday. As it turns out, the Fed did not wait. On Sunday, the central bank lowered the fed funds target rate from 1% – 1.25% down to 0% – 0.25%. The Fed also initiated a gargantuan 700-billion-dollar quantitative easing program in an effort to limit the virus’s effects on the economy. Fed Chairman Jerome Powell made it clear interest rates will not be moving back up anytime soon. “We will maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals,” Powell said. For more on the rate cut, refer to CNBC.
- Many of the world’s most notable financial figures and institutions say global recession is fast becoming a certainty. Former U.S. Treasury Secretary Larry Summers says the coronavirus outbreak could be the most serious crisis of the century. He pegs the chances of recession at a whopping 80%. Pimco’s chief economic adviser Joachim Fels notes a “distinct possibility both the U.S. and Europe will fall into recession.” Analysts at JPMorgan Chase told clients this week that the risk of a global recession “has risen materially.” Former International Monetary Fund economist Taimur Baig says the outlook is so grave because of the unknowns associated with this threat. According to Baig, this crisis will have passed only when we can say “the pandemic has ended. That’s what makes it very uncertain.” The Straits Times has more on mounting projections that we’re on a collision course with a worldwide recession.
- There’s volatility – and there’s volatility. Obviously, things have been jumpy lately for mainstream risk assets. However, that uneasiness pales in comparison to the thrashing cryptocurrency has experienced amid the coronavirus chaos. In just 24 hours, from last Thursday to Friday, bitcoin lost a stunning 48% of its value. Similar losses were felt across the entire cryptocurrency market, with XRP dropping roughly 42% and Ethereum sinking 49%. As reported in the March 2nd edition of the Augusta Touchpoint, bitcoin hasn’t demonstrated any safe-haven potential during the coronavirus outbreak, as some savers may have hoped. Last week’s collapse confirms bitcoin and other cryptos remain highly speculative assets with no apparent safe-haven properties. CNBC has more on digital currency’s extra-wild week.
- Both actual and feared impacts of the current pandemic have conspired to bring the global economy to a crawl. In the process, unprecedented volatility has been injected into practically all financial and asset markets. There is one bright spot, however: gold. A number of experts are now projecting that we could see a new all-time high for the metal this year. These experts expect the Fed to apply drastic monetary policy measures to restore stability to the economic system (we’ve already seen this in the interest rate drops). Such measures have the capacity to greatly weaken the dollar and drive the price of gold much higher. For more on the prospect that we could see 2,000-dollar-an-ounce gold this year, read the latest blog article from Augusta Precious Metals.
The world is moving very fast right now, which means you have a great deal to manage: personal and family health is at the top of the list, but there’s so much more. Will stores run out of basic essentials? Will kids or grandkids be home from school for the rest of the year? What kind of major changes will take place at work? The list seems endless right now because it is endless. This is uncharted territory for all of us.
When it comes to the protection of your retirement savings, however, you need not worry. You have viable, trusted options for protecting your hard-earned money. And Augusta is always here and ready to help. To find out how easy it is to defend your portfolio with gold, call Augusta Precious Metals at 800-700-1008 or visit Augustapreciousmetals.com. If you have 100,000 dollars or more in your portfolio, ask about our exclusive gold guide which describes what’s happening in the market and how to take advantage of gold’s strength. And also make sure to ask how you can get a seat for the eye-opening Profit & Protect Web Conference hosted by chief economic analyst Devlyn Steele.
We look forward to hearing from you.