Crypto Cools Off While Gold Holds Strong and Signals a Potential Q4 Breakout

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Last Updated on: 11th September 2023, 05:51 pm

There are some worrying signs in the economy. 

For one, consumer credit card debt hit a record $1 trillion in August. At an average interest rate of 20%, more and more American households are becoming financially hamstrung by their mounting debts. This problem will only be exacerbated by the resumption of repayments on America’s $1.7 trillion in student loans later this month. 

September is also the stock market’s historically worst-performing month of the year, and this year is no exception. Already the S&P 500 Index is down 1.31% on the month. 

Meanwhile, the cryptocurrency market, which spent the first half of the year on a red-hot growth streak, has started to cool. Large institutional players liquidated some of their crypto holdings, including Elon Musk’s SpaceX, after writing down its value by nearly $400 million. 

In August, both Bitcoin and Ethereum saw steep price corrections. Over the last 30-day period, Bitcoin and Ethereum fell by 11.89 and 11.18 percent, respectively. This has been widely described in the cryptocurrency media as a long-awaited correction following the sector’s meteoric rise to over $30,000 per token in April—a gain of over 70% on the year. 

Market Snapshot: September 6, 2023

• Inflation Rate: 3.2%
• Fed Rate: 5.30% to 5.50%
• Gold Price: US$1,951/oz.
• Silver Price: $23.84/oz.
• Bitcoin Price: US$25,589
• Ethereum Price: US$1,623

There is, however, good reason for optimism. 

There remains considerable upside potential in the alternative assets markets. For example, TD Securities predicts gold prices to breach its all-time high and hit $2,100 per ounce by Q4 2023 or Q1 2024. Some analysts go even further, such as David Neuhauser of Livermore Partners, who foresee a price target of $2,500 by the end of next year. 

Amid unprecedented central bank gold purchases and rumors of a BRICS gold-backed reserve currency, there are strong market currents working in gold’s favor. In July alone, the Polish central bank added a whopping 22.4 tonnes of gold to its coffers. 

With the next FOMC meeting scheduled for September 20, there’s no telling how markets are going to respond to Chairman Powell’s next announcement. If rates continue to increase, we could see stocks and speculative assets continue to tumble while more institutional capitals seek stability in safe-haven assets. 

Despite the uncertainty in the markets, there are risk management solutions to help you achieve peace of mind. Gold and silver have historically outperformed conventional financial markets during times of economic distress and uncertainty. Taking a position in either asset could help shore up your financial position in the months ahead.

To take control of your financial security, consider diversifying with precious metals today.