The life-threatening pandemic Coronavirus has caused a profound effect in every life aspect possible. The lockdowns and quarantines lead to an economic meltdown, as stocks plunge and unemployment rate rises.
On 14 March, the US Labour Department recorded that 4x more Americans became jobless amid the closure of restaurants, shops, and other industries (from 70,000 to 281,000). The massive layoffs are predicted to continue the following week, causing an even severe economic meltdown. Goldman Sachs estimates a total of 2.25 million Americans would be eligible for unemployment claims.
What about other countries? The second economy giant, China, reported a 6.2% spike on the unemployment rate last month. This means 5 million people lost their jobs just around 2 months after the outbreak. According to CNBC, The Economist Intelligence Unit Analyst, Dan Wang, expected that the number would grow to 9 million. The decline of consumer goods retail sales(20.5%), industrial production (13.5%), fixed-asset investment (24.5%), and other industries contributed to the layoffs. Meanwhile, the International Labour Organization predicted a few scenarios of a rise in global unemployment, between 5.3 million for the “low” scenario and 24.7 million for the “high” scenario.
With the labour-market continuously hit the rock bottom, investment is seen as an alternative source of income. Goldman Sachs’ Commodity Researcher Jeffrey Currie informed that now is the best time to purchase gold as the famous safe-haven investment has reached an inflection point.
“We are likely at an inflection point where ‘fear’-driven purchases will begin to dominate liquidity-driven selling pressure, as it did in November 2008”.
On the other hand, the cryptocurrency market has started to recover alongside gold. At the time of writing (25 March 2020, 09.20 UTC), the price of prominent coins demonstrates a stable growth, with Bitcoin touches $6,800.
Crypto Billionaire Michael Novogratz believed that gold’s price would spike even higher than before, as well as Bitcoin. Previously, he also mentioned that “This will be and needs to be BTC’s year”.
Furthermore, Market Analyst LightCrypto explained that gold and Bitcoin exhibited a correlation as both prices increased concurrently after the Federal Reserve announced new initiatives to stabilize the US economy.
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