All Eyes on Wall Street and Cryptocurrency

By Erin Fischer

In recent weeks, both the stock market and cryptocurrencies have been making headlines—but different ones than investors have come to expect. If you’ve seen your portfolio take a hit, either from equities or bitcoin, now might be the time to consider hedging your portfolio with a stable asset like gold.

Stock Market Scare

Investors on Wall Street got quite the scare on Monday. The 1,175-point (4.6%) stock market drop set records as the largest single-day point decline in history. Although it caused a stir, it wasn’t nearly as devastating as Black Monday of 1987 or the 2008 financial crisis.

Nonetheless, this decline had a worldwide effect, sending foreign markets plummeting. In Hong Kong, stocks fell 5.1%, while in Japan and London, the Nikkei and FTSE 100 dropped 4.7% and 2%, respectively.

The Dow continued to drop Tuesday morning, starting the day down another 567 points on top of Monday’s losses. While it managed to recover those loses and end the day up 567 points, the markets are still volatile and have not fully recovered from Monday.

Some experts say the U.S. stock market drop is in response to fears that the Federal Reserve may be hiking interest rates higher than expected, while others say corrections to the exceptionally high stock and bond markets may actually be beneficial.

You may think the stock market freefall would send gold and other precious metals soaring; however, this is not always the case. Whereas gold prices reached a high of $1,345 per ounce Monday following stock market losses, the yellow metal retreated overnight and into Tuesday as the U.S. dollar rallied higher.

John Sharma, an economist at National Australia Bank Ltd., explains gold’s subdued response as follows: “The recent rout in equity markets should be supportive of gold, although not immediately. The muted reaction stems from the recent strong jobs numbers, which indicate increased confidence about the economy.”

So, although gold’s response to Monday’s stock market plunge may not be exactly what you envisioned, some experts believe the yellow metal could eventually see support from this hit, especially if world stock markets continue a downward trend.

Cryptocurrencies: To Regulate or Not to Regulate?

Like the Dow and other international stock markets, bitcoin price has also set record losses in recent weeks. Whereas bitcoin price reached a high of over $20,000 the week before Christmas, it has since fallen dramatically—reaching levels under $6,000 before recovering to just over $8,000 as of this morning.

Nevertheless, whereas Wall Street was collectively holding its breath on Monday, cryptocurrency investors let out a sigh of relief as J. Christopher Giancarlo, chairman of the Commodities Futures Trading Commission (CFTC) proposed a “do no harm” policy for cryptocurrencies ahead of the Senate Banking Committee hearing with Securities and Exchange (SEC) chairman Jay Clayton on Tuesday.

Essentially, this means the CFTC wouldn’t take explicit action against cryptocurrencies. However, both Giancarlo and Clayton do hope to bring increased federal regulation to the realm of cryptocurrencies. Clayton notes he hopes “regulatory and policy efforts [will] bring clarity and fairness to this space.”

In particular, Clayton looks to target Initial Coin Offerings (ICOs) by putting them under closer scrutiny. Because of the sheer number of ICOs on the market, it becomes difficult to navigate a scam from an authentic ICO. For this reason, Clayton seeks to register ICOs as securities under the SEC, stating, “I have asked the SEC’s Division of Enforcement to continue to police this area vigorously and recommend enforcement actions against those that conduct initial coin offerings in violation of the federal securities laws.”

Essentially, Clayton urges investors to proceed carefully when investing in cryptocurrency and ICOs—and his proposed regulations seek to make investing in these types of assets more secure.

What This Means for Gold

In the midst of the chaos surrounding equities and cryptocurrencies, gold has upheld its reputation as a safe haven asset. You’d be especially relieved in recent weeks if you balanced your portfolio with gold, as it serves as the perfect hedge against the volatility in stocks and bitcoin. Gold still ended 2017 up 13%, despite the plethora of headlines touting stocks and bitcoin—and the metal has continued to post upward gains in 2018!

Even if you continue to invest in equities and bitcoin, gold is a vital asset to your portfolio—and could make the difference between losing it all or just taking a minor hit. If you’re looking to add this trusted and secure asset to your portfolio, we now have 1-ounce gold bars available for as low as Spot + $35 per ounce*. To purchase these attractively priced gold bars, please call us at 800-831-0007 or email us.

*Prices subject to change based on market fluctuation and product availability. Prices reflected are for cash, check, or bank wire. Free shipping is available for 1-ounce gold bar purchases of 10 ounces or more. Offer expires Friday, February 16, 2018, or while supplies last.