What Tricks Did These Investors Use to Make Money During Banking Crises?
Bullion.Directory Guest Post
Edited by Alice Walker
Author: Ryan Paulson, Chief Editor at IRA Empire
So far, 2023 has been an extremely volatile year economically. We have seen the UBS-Credit Suisse merger and the collapse of multiple big banks including the Silicon Valley Bank.
Many experts have even termed the current banking crisis as the worst bank failure since 2008. And frankly, I would agree.
Take, for example, the Silicon Valley Bank. It was among the largest banks in the industry and extremely popular in the tech industry. Moreover, it collapsed just a few days after Silvergate Capital Corp had announced that it was shutting down its operations.
It’s worth noting that Silicon Valley Bank was the second-largest bank to collapse in the country’s history. A few days later, Signature Bank of New York became the third-biggest bank to fail in US history.
These financial events have prompted many high-net-worth investors to move their assets from conventional investments to alternative options instead.
Recent trends show that the price of gold has been rising steadily this year, especially after the SVB crisis.
Also, a Kitco survey revealed that retail investors remain bullish on gold in the near term even when they have a conservative price outlook.
And it’s not just the investors, even central banks have been scooping gold in record quantities.
However, while the banking crisis was going on, there was a certain subset of investors that enjoyed record profits.
You might ask, “Who?”
The answer is: Gold buyers.
In May 2023, Gold prices surged to record levels touching the $2,067 mark. So, when other investors were panicking about the uncertainty of US debt ceiling negotiations, gold buyers were enjoying counting their dollars (or gold coins).
Why is Everyone Buying Gold? (Are You Missing Out?)
There are many reasons why people are investing heavily into gold. But the following three are the most prominent:
1. The Inverse Relationship
Gold is a tradable commodity and it is denominated in the US dollars. So, it has an inverse relationship with the currency.
That’s why whenever the US dollar begins falling, gold prices begin to rise because overseas buyers find it cheaper to buy the precious metal.
Due to inflation and geopolitical conditions, the US dollar has fallen considerably this year. As a result, we have seen gold prices touch record heights in 2023.
2. Safe Haven
Historically, gold has always surged in value during economic crises. Moreover, investors have always chosen gold as a store of value during times of geopolitical tensions and market volatility.
The inverse relationship I mentioned earlier plays a huge role behind this general sentiment.
3. Easier to Manage
Unlike other alternative investments such as real estate, gold’s value doesn’t depend on too many factors.
It’s easier to manage and an easy choice when you’re looking to hedge your investment against inflation.
If you’re buying physical gold, then you can even store the precious metal safely and stay assured that your investment is safe.
This is a huge advantage gold has over other alternative investments. Investments like real estate and even cryptocurrencies can get more difficult to manage.
What’s the Best Way to Invest in Gold for US Investors?
After seeing the numerous advantages gold has over other investments and its impressive performance this year, you might also want to buy some gold.
There are multiple ways to go about this process.
You can start with buying physical gold from a reputed precious metals dealer.
Alternatively, you can opt for paper gold, although I don’t recommend it because I believe physical gold is a safer investment.
Currently, for US investors, the best way to invest in gold is through SDIRAs.
SDIRA stands for Self-Directed Individual Retirement Account or Self-Directed IRAs. They have become increasingly popular among investors due to their flexibility and ease of investing.
SDIRAs that focus mainly on gold are also known as Gold IRAs.
With a Gold IRA, you can buy physical gold and other precious metals while availing the tax benefits of an IRA.
Furthermore, you can even rollover funds from your 401(k) into a gold IRA to invest in physical precious metals.
The company I recommend for this process is Augusta Precious Metals because of its spotless track record and amazing reputation. They have 1000s of positive reviews on BBB and other consumer platforms as well as one of the largest libraries of investor resources.
I suggest you check out some Augusta Precious Metals reviews and make an informed decision.
Conclusion
During economic downturns, gold has always shone bright among other investment options.
Still, I recommend you do your own research before making any final decisions.
Keep in mind that past performance doesn’t guarantee future returns and you should never trade more money that you can afford to lose.
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Bullion.Directory or anyone involved with Bullion.Directory will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading in precious metals. Bullion.Directory advises you to always consult with a qualified and registered specialist advisor before investing in precious metals.
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