Stock market uncertainty is back. With rough trading hitting markets as of August 14, flashbacks to December 2018 were at the top of investors’ minds. After the Dow fell 800 points in a single trading day, and both the NASDAQ and S&P 500 followed suit, it’s undeniable that investors should be on the search for better investments.
Bonds are no better either. What prompted the dark turn on the market was the yield curve on bonds inversing. With 10-year Treasury bond yields falling below 1.6%, short-term lending became more profitable than long-term lending, typically interpreted as a sign that a recession is on the horizon. Optimism in markets is fading and it’s time to find a way out.
Riding out the storm with your money in tact is key to long-term growth. While the recovery is a big part of portfolio building, it helps if you have assets that can hold value or appreciate through recession. This can give you the kind of risk-balance and capital you need to buy stocks while they are falling and increase your recovery position, or a backbone to your portfolio that won’t crumble under volatility.
How Gold and Silver React to Market Uncertainty
One tried-and-true way to ride out stock losses is through gold and silver. When gold prices are high, it’s often because investors have shrinking faith in stocks and bonds. Gold is a fear-driven asset. Investors panic and want to move their money quickly into something that will stay the course throughout a recession or a market nosedive. Gold and silver are very good assets to own through a recession – especially if you buy before one happens.
Investors who want to increase their gold and silver positions as the economy heads toward turbulence can quickly snap up precious metals at online gold sellers like Silver Gold Bull, which make buying bullion straightforward and fast. Buying online means:
- You buy exactly what you want
- You see live metals prices updated in real time
- You pay less in premiums
You can learn more at Silver Gold Bull about how shipping and delivery works.
Fear isn’t the only factor behind bullion prices. These are some of the leading reasons to invest in gold and/or silver beyond the stock market.
#1 European Debt
European debt is no longer seizing headlines like it once did, now that Britain has turned itself into the biggest story coming out of the EU. But Italy’s debt crisis (at 133% of GDP) should be enough to keep investors concerned that the threat of a major European banking crisis could have domino effects, especially given French banks’ major exposure. Debt sparks major moves in monetary policy that can have very negative consequences in the long run.
#2 Solar Power Boom in China
Renewable energies mean major industrial demand for silver. Silver is a key component in solar panels, and China is undertaking a massive infrastructure project to clean up its highly-polluted air by building solar farms. With two-thirds of the country’s energy still coming from coal, there’s a long way to go, fueling silver demand for years to come.
#3 Escalating Trade Conflicts
One major reason behind these recession fears in the first place is the escalating trade war between the U.S. and China. Tariffs are bad for business, something that free trade proponents have known for decades. It costs consumers and it drags the global economy down. As long as protectionism remains the trade policy of the day, gold and silver will be reliable assets.
Gold and silver are safe bets in times of uncertainty. With signs of a recession looming on the horizon, now is a great time to increase your position.