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The coronavirus outbreak is real. What many dismissed initially as a health crisis that would be quickly contained is now a serious threat to the global economy. Anticipating a profound worldwide slowdown, financial markets have been sent into correction territory faster than any other time in history. And now a banking giant says 2020 will be the worst year for the global economy since the 2008 financial crisis. This week’s Touchpoint begins with a look at Bank of America’s dismal economic projection for this year.
- Bank of America wants you to know now: 2020 is not looking like it will be merely an “off” year for economic growth. The megabank’s Global Research division says the rapidly accumulating economic effects of the coronavirus cannot be overlooked. In fact, says BofA, this will be the worst year for the global economy since the 2008 financial crisis. BofA analysts project global growth will register just 2.8% when the dust finally settles in 2020. That figure would represent the first time worldwide GDP comes in below 3% since the “official” end of the Great Recession in 2009. To be clear, BofA’s economic analysts attribute their projection of a financial crisis to more than just the fallout from the coronavirus. They expect the ongoing trade war between the U.S. and China to remain a problem. Uncertainty about the outcome of the 2020 U.S. presidential election also will be an economic antagonist, in their view. CNBC has more on BofA’s forecast.
- Is bitcoin a safe-haven asset? “Bitcoin as a safe haven” has been a popular narrative since digital currency began gaining traction a few years ago. However, its performance in the face of the coronavirus outbreak is calling that assessment into question. In the last month, as the coronavirus was evolving toward a tipping point, bitcoin fell 6%. Over the same period, gold rose roughly 5%. Speaking to Yahoo Finance, Frank Chapparo of bitcoin news site The Block sees it this way: “This is still a very nascent, volatile asset class. If…I want predictability in my portfolio, I’m not going to be outsized allocating to bitcoin and other digital assets.” Chapparo does think bitcoin eventually might enjoy safe-haven status to help protect portfolios from the ravages of financial crisis as it matures in the future. However, that could take decades to play out, in his view. For retirement savers looking for the safe-haven “predictability” Chapparo alludes to, gold remains a popular option.
- It’s funny, in a way, that Warren Buffet dislikes gold as much as he does. In spite of his dislike, he makes an excellent case for it in the most recent edition of his annual letter to shareholders. Buffett’s affection for equities is well-known. That affection, however, does not prevent the Oracle of Omaha from warning that markets can plummet in a relative instant. MarketWatch’s Nigam Arora points out that Buffett says that very thing in his annual letter to Berkshire Hathaway shareholders. “Anything can happen to stock prices tomorrow,” writes Buffett. “Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater.” To Buffett’s point, fears over the coronavirus have decimated markets in the blink of an eye. The S&P 500 fell into correction territory in just six sessions. The fact that anything can come out of anywhere, devastate markets and lead to financial crisis is perhaps the best reason to own gold.
- In the last quarter of 2018, financial markets fell nearly 20%. When that happened, gold was there to carry the load, climbing 7%. In the first week of 2020, when it looked as though Iran and the U.S. might engage one another in a shooting war, gold jumped 3.5 %. And with the steadily evolving outbreak of the coronavirus, gold has again demonstrated why it is the safe haven of choice for so many. It has climbed as much as 10% recently. There are many historical examples of gold values rising in the face of economic turmoil. But it can be comforting to see the metal respond positively in face-offs with present-day crises and volatility. For more on gold’s real-time demonstration of power amid chaos, read the latest blog article from Augusta Precious Metals.
Fears of a global pandemic are growing. Financial markets have entered correction territory at the fastest rate ever. And experts are predicting that 2020 will be the worst year for the global economy since the financial crisis. Are you prepared to leave your savings unprotected in an environment such as this?
Gold Safe Haven for Retirement in Financial Crisis
Call Augusta Precious Metals at 800-700-1008 or visit Augustapreciousmetals.com to learn about adding the protection of physical gold to your portfolio. Make sure you also find out if you’re eligible to participate in our exclusive Profit & Protect Web Conference. This special retirement protection webinar is hosted by our chief economic analyst Devlyn Steele. Mr. Steele demonstrates just how the financial system makes it so tough for retirement savers to achieve financial independence. The 36-year veteran of economic analysis and Harvard Business School member discusses solutions, as well. Mr. Steele shows how adding precious metals to your portfolio can ensure you stay on the path to retirement success. You can see what’s going on these days and feel the effects of market stress that threatens to lead to financial crisis. The stakes couldn’t be any higher. Contact Augusta for help.