December 2022 Newsletter: Pessimism Still Permeates the Markets, FTX Deals a Blow to Bitcoin

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Last Updated on: 16th December 2022, 07:09 pm

November saw a variety of economic data releases, and many weren’t that positive. Fears of inflation coupled with recession continue to bounce around the media outlets. Bloomberg Economics’ latest article warns there is going to be a global recession, led by the United States and the EU.

Inflation data for November, which remains high, saw a slight drop in the Consumer Price Index from 8 percent to 7.7 percent YoY. While the housing market continued to show a decline with housing starts falling from 1.488 million to 1.425 million in October.

On a positive note, employment data was positive, non-farm payrolls added another 261 thousand jobs. Although the total unemployment rate increased to 3.7%, it still remains low. And in his most recent speech, the Chairman of the Federal Reserve stated that there could be room for smaller interest rate increases.

Source: TradingView

Precious Metals

Gold had a bullish run in November starting the month at a price of $1,632 per ounce to rally to its close of $1,768. And at the time of writing the shiny yellow metal had continued higher trading at just over $1,780 per ounce.

Platinum continued the rally it started in October and gained another 11.7 percent in November. The price of platinum opened in November at $924 per ounce and rallied to close the month at $1,032. At the time of writing this precious metal had lost some ground and was trading at $1,001 per ounce.

The Gold Council issued its Q3 Gold Trends report with some bullish data for precious metals investors. The organization found that the Q3 of 2022 had shown an increase in demand for gold by 23 percent compared to 2021.

It also highlighted that gold demand increased by 18 percent YTD compared to the same period for 2021. Although it also showed that while there had been a net outflow in demand for gold from funds, central banks had been busy buying gold. According to the report, central banks accumulated an estimated 400 tons of gold per quarter.

Crypto

Cryptocurrencies had a bout of more bad weather as the crypto winter took on new winds from the bankruptcy of the crypto derivative exchange FTX and the subsequent fallout to other market players. Bitcoin started the month at $20,479 but fell to a recent low of $15,760 as the FTX debacle unraveled.

At the time of writing, Bitcoin had recovered some of the lost ground and was trading at $17,100. Considering the high volatility of cryptocurrencies this drop may not be of particular concern. But it opens the door to the possibility of more pain for crypto bulls in the event of any negative news.

On another more positive note, the inflows of Bitcoin slowed down somewhat over the past 7 days compared to the previous period. Although inflows were still higher than outflows there might be some respite.

Inflows and outflows into exchanges are important because historically inflows into exchanges lead to the cryptocurrency being sold. While outflows from exchanges mean that the buyers are planning to hold their assets for longer and won’t be selling immediately.

Stock Market

The stock market managed to recover some of the lost ground since the start of the year. The S&P 500 managed to rally just over 4 percent. Thanks in most part to softer inflation data inviting investors to hope in the Federal Reserve slowing it down with the interest rate hikes.

However, concerns remain among many pundits for the future of the economy if inflation continues to remain high. Coupled with continued pressure on various products from supply chain constraints and the ongoing war in Ukraine.

Bottom Line

We always recommend investors diversify their investment portfolio to the largest extent possible. Investing in assets that have little correlation to stocks and bonds offers you some protection from financial crises. Precious metals also offer the ownership of a physical asset outside of the banking system.

You may want to invest in gold and silver through a gold IRA company to take advantage of the tax-enhanced environment. These companies also have specialized expertise in managing and setting up gold IRAs. We have created a list of the top companies, you can read our reviews on them here.