Hi, my name is Ed Moy and I served as director of the United States Mint from 2006 to 2011. I'm also the senior IRA strategist for U.S. Money Reserve. You may have heard that companies laid off over 720,000 employees last year, with more planned for 2024. What does this mean for the economy, and how might this affect your retirement investments?
There are twice as many layoffs in 2023 than in 2022, and the main reason has been high interest rates. Interest rates have been kept high by the U.S. government as a key part of the strategy to bring inflation down. Higher interest rates make it more expensive for companies to borrow money, and that, in turn slows down the economy and when the economy slows down, inflation starts to come down.
When companies know that the United States government wants to slow down the economy, some of them restructure, and that means laying off employees to save money and to prepare for a time where there might be less business.
But while 720,000 layoffs sounds like a lot of people, and it is, during that same time, 2.7 million jobs were created, and with the unemployment rate around 3.7%, that means that many more people were hired than were laid off. What does this mean for the average investor, especially those focused on having enough for their retirement?
In the short term, it means that interest rates will likely start coming down in 2024. With the inflation rate falling from 9% to 3.5%, the high interest rates are doing their job, bringing down inflation while keeping the economy from tipping into a recession. As a result, the Federal Reserve has signaled that it will likely slowly start decreasing interest rates from the current 5.5%. Most of the time, gold prices historically go up when interest rates go down and when interest rates start to go down, demand for gold usually increases as investors expect that gold prices will rise.
But it is hard to tell what will happen to the economy in the mid and long term. And that's because no one knows what will happen. Will the wars in Ukraine and Gaza spread and get worse? Will China invade Taiwan? Will there be another major terrorist attack or another pandemic? That's why it is almost always a good time to consider diversifying your retirement portfolio with gold.
Gold's performance over the long term is very good. It's really hard to find a ten year period where gold lost some of its value. That's why it's also considered a store of value. There are stocks and bonds that end up being worth nothing, but gold has always been worth something during its 5000 year history.
One of the easiest ways to diversify your retirement investments with gold is through a precious metal IRA, which you can hold real gold or silver that you own. This balances your retirement with an asset that will always be worth something in the future, and it also acts like an insurance policy when stocks and the value of the dollar go down.
My precious metal IRA is from U.S. Money Reserve.
