The United States may default on its debt. Here’s what that could mean for gold.

As if the US economy didn’t have enough problems this year, it now faces a potential debt ceiling crisis.

Treasury Secretary Janet Yellen recently warned lawmakers“After reviewing recent federal tax receipts, our best estimate is that we will be unable to satisfy all of the government’s obligations by early June, and potentially before June 1, unless Congress raises or suspends the debt ceiling before that time.”

If the United States defaults on its debt, it will be unable to pay its bills. Swinging global financial markets And what results Yellen predicted would be “an economic and financial disaster.”

The news has investors understandably worried about protecting their money should the worst happen. There is gold is becoming increasingly popular This year investors will want to protect their portfolios from persistent inflation and other economic problems. With this latest concern on the horizon, will it continue to be a wise investment? We asked the experts for their opinion.

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What could a US debt default mean for gold?

A debt ceiling crisis will have wide-ranging implications for your finances. Here’s how this could affect gold investing.

It can hedge against panic

When economic news is dire, The gold started to burn. In the event of a credit crunch, investors will likely turn to gold to protect their money from a collapse.

“For those genuinely concerned about a possible US debt default, gold is probably the best hedge in times of panic because it works so well,” said Noah Damsky, CFA and principal at Marina Wealth Advisors. “Treasuries can be a go-to during times of stress, but when stress is directly related to Treasuries, they may not act as the cushion we think. As a result, gold can be a great short-term hedge since Treasuries will be at the center of the storm.”

Whether the debt ceiling crisis materializes or not, economic panic will surely rise again. by Adding gold to your portfolio Today, you can easily ride out such fears.

Its value will likely remain constant

Gold has been a trusted store of value for centuries. It is not subject to the whims of market forces like wealth stockMaking it a good way Protect your portfolio from losses. It can also serve as a Reliable source of cash When the purchasing power of the dollar decreases.

This makes it a solid investment anytime, but especially when a crisis strikes.

“Investing in gold during times of economic uncertainty, especially when it comes to the national debt ceiling, can be a wise decision,” says Hanna Horvath, CFP. “Gold is generally a stable asset that holds its value over time. The precious metal is often unaffected by inflation or currency value fluctuations, making it an option for investors to protect their assets. If the U.S. defaults on its debt, gold is a May be a wise investment choice.”

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Prices may increase

The price of gold has reached Near-historic highs This year, and that trend could continue if the US defaults on its debt.

“I believe that extremely high levels of debt and a growing deficit for the United States could eventually lead to a credit crunch in which the price of gold rises dramatically,” said Doug Carey, CFA, president and owner of WealthTrace, who noted that “more money By building the Federal Reserve to buy debt … will send the price of gold much higher.”

Because gold is seen as the best Long term investmentIt is worth considering At any cost. High prices simply indicate that it is in high demand—a signal that economic conditions make it particularly valuable.

Bottom line

With debt ceiling negotiations At a stalemateGold is a relic Explore value investing.

“[I]If the U.S. debt defaults, investing in gold would certainly be a smart investment for a number of reasons,” said Jeffrey Wood, CPA, CFP and partner at Lyft Financial. “Gold has historically been a reliable asset, especially during financial crises, and investors generally consider it a safe investment. As will go to gold. It tends to maintain value in the long run against inflation and currency depreciation, good for diversification and will increase demand. It will be highly liquid and very valuable if the US debt defaults.”

That said, as with any financial decision, it’s important to do your research and take into account your specific goals and needs.

“Whenever I work with a client, I’m very careful to make sure the recommendations I make for them are prudent in keeping with their risk tolerance, time horizon and overall financial plan,” says Wood. When in doubt, consult a financial advisor for the best guidance for your situation.