Gold Crashes 13%! Gold crashes 13% as shops close throughout the world. Bitcoin is still open. Germany was the latest country to see shops close.
In London, life appears to be generally normal, while France and Italy continues to see shutdowns. The British government in the background, however, has given unlimited powers for the Chancellor to do “whatever it takes” to stabilize the economy. It is expected that London could be totally shut down in the second week of April.
The safe haven asset is not looking very safe anymore – it has fallen less than stocks but still continues to fall since Italy locked down Milan on Marth the 9th.
It’s likely that this crisis, due do it not being a banking crises, is the reason why Gold is not being seen as a safe haven. This is an economic crisis, something that most of us have never seen.
We are beginning to see a period of deflation – money is being burned because people are not borrowing – new money is not being created because of it.
Banks could be in trouble if people start defaulting – governments may have to step in and buy those loans to cancel them out so neither the bank nor the borrower is affected.
Right now, the US is seriously considering helicopter money – there are complex things to consider when looking at who to give money, so the White House plan to give everyone $1,000 makes sense – but too much could hurt the economy.
A more sophisticated method to deal with this economic crisis (as well as a method to try to flatten the COVID-19 curve) is to just cancel two months of economic activity.
What is the alternative? Cryptocurrency – you can buy and trade and sell cryptocurrency at the comfort of your self-quarantined home. But cryptocurrency too is not faring well.
Nothing seems to be faring well – probably because this is the beginning of a depression.
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