The U.S. may default on its debt. Here’s what it could mean for gold.

The US could default on its debts. What could this mean for gold?

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As if the US economy didn’t have enough problems this year, it now faces a potential debt ceiling crisis.

Treasury Secretary Janet Yellen warned lawmakers recently“After reviewing recent federal tax collections, our best estimate is that we will be unable to meet all of the government’s obligations by early June, and possibly by June 1, if Congress raises the debt ceiling. or does not suspend. At this time.”

If America defaults on its debts, it will not be able to pay its bills. shaking up global financial markets. And what happened as a result Yellen predicted. There will be “economic and financial collapse”.

The news has investors worried about protecting their money should the worst happen. There is gold. Be popular fast This year as investors try to protect their portfolios from persistent inflation and other economic problems. With this latest concern on the horizon, will it continue to be a wise investment? We asked the experts for their opinion.

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What a US Debt Default Could Mean for Gold

A credit limit crisis will have far-reaching effects on your finances. Here’s how this could affect gold investing.

It can hedge against panic

When economic news is dire, Gold shines.. In the event of a credit crunch, investors will likely continue to turn to gold to protect their money from losses.

“For those who are really worried about a potential U.S. debt default, gold is probably the best hedge because it performs well in times of panic,” says Noah Demsky, CFA and principal at Marina Wealth Advisors. ” “Treasuries can be a go-to during times of stress, but when stress is directly related to treasuries, they may not act as the cushion we thought they would. As a result, gold Can be an excellent short-term hedge as treasuries at the center of the storm.”

Whether or not the debt ceiling crisis is over, economic panic will resurface. by the Adding gold to your portfolio Today, you can make it easy to overcome such fears.

Its price will likely remain stable.

Gold has been a reliable store of value for centuries. It is not subject to the whims of market forces like assets. Stockmaking it a good method Protect your portfolio from losses.. It can also work as a A reliable source of cash When the purchasing power of the dollar falls.

This makes it a solid investment anytime, but especially when a crisis strikes.

“Investing in gold during times of economic uncertainty, especially when it comes to the national debt ceiling, can be a wise decision,” says Hannah Horvath, CFP. “Gold is generally a stable asset that holds its value over time. The precious metal is often unaffected by inflation or fluctuations in currency values, making it a go-to for investors looking to protect their assets. creates an option. Its debt, gold can be a wise investment choice.”

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Prices may continue to rise.

Gold prices have reached Near historical elevations This year, and the trend is likely to continue if the US defaults on its debt.

“I believe that extremely high levels of debt and rising deficits for the U.S. could eventually lead to a credit crunch where the price of gold rises dramatically,” said Doug Carey, CFA, president and CEO of WealthTrace. says Malik, who notes that “the Federal Reserve’s creation of more money to buy debt…gold prices will go much higher.”

Because gold is best seen. Long term investmentit is worth considering. At any price. High prices only indicate that it is in high demand.

The bottom line

With debt ceiling negotiations At a standstillgold remains one. An investment worth exploring.

“[I]If the U.S. defaults on its debt, investing in gold would certainly be a wise investment for several reasons,” says Jeffrey Wood, CPA, CFP and partner at Lift Financial. “Gold has historically been a valuable asset. Confidence has been an asset, especially during financial crises, and investors will generally turn to gold as a safe investment. It tends to hold value for a longer period against inflation and currency depreciation, is good for diversification and will increase demand. It is highly liquid and will be very valuable if the US defaults on its debts.”

That said, as with any financial decision, it’s important to do your research and take into account your specific goals and needs.

“Whenever I’m working with a client, I’m very careful to make sure that any recommendations I make to them are within their risk tolerance, time frame,” says Wood. Be judicious in conjunction with the horizon and overall financial plan.” When in doubt, consult a financial advisor for the best guidance for your situation.

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