The rapid spread of the coronavirus has quickly halted economies, sending shock waves throughout financial markets around the world.
The S&P 500 is already down 30% from its all-time highs made just five weeks ago.
In comparison, it took about a year to drop 30% the midst of the 2000 tech bubble and the Global Financial Crisis of 2008.
Many are wondering if we're in the early stages of another recession... or worse, a depression.
So, does that mean the stock market will close?
Normally, the market stays open even during periods of extreme financial crisis.
It never closed during the Great Recession from 2007 to 2009. And it never even closed during the Great Depression from 1929 to 1933.
But when we look to history, it's clear that other "black swan" events have caused trading to temporarily stop for days or weeks at a time.
Some examples include: World War I in 1914 (10 days), the Sept. 11 attacks of 2001 (four days), and most recently Hurricane Sandy in 2012 (two days).
In today's heavily computerized market, circuit breakers temporarily halt trading if stocks fall too far, too fast. And we might even see the stock market close altogether as the crisis worsens. It would be a temporary "cooling off" period to stop the sell-off from spiraling down even more.
As the number of confirmed cases swells, the coronavirus is looking more and more like another black swan event that could cause the stock market to shut down.
But because we're still in the early stages of learning about the virus, we simply don't know yet.
The market could shut down for days, weeks, or even months.
Regardless, you need to be prepared. Instead of panicking, you should have a plan.
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Today, we'll show you exactly what to do to protect your money from the stock market crash...
What to Do Before the Stock Market Closes
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On Tuesday, Treasury Secretary Steve Mnuchin said that he does not believe the markets will close due to coronavirus.
He also said that the market's hours of operations may be shortened - something which we've never seen before.
The truth of the matter is we have no idea if the stock market will close or not. It's somewhat out of our control at this point as we try to curb the spread of the virus by quarantining ourselves as best as we can.
What we do know, however, is that the situation is likely to get worse before it ultimately gets better.
The number of confirmed coronavirus cases has doubled from 100,000 to 200,000 in just the last 11 days.
And when you do the math on the exponential rate this virus is spreading, it's looking more likely that we're going to have to shut down the entire economy for a prolonged period of time.
In case you are worried that stock market does close and you can't sell your investments, there are two things you can do to protect your money before the stock market closes:
- Hold cash.
- Buy physical gold.
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Cash and physical gold are both hard assets that you can take 100% ownership over.
Cash is the safest way to play this potential panic. Even though the federal government is printing money through its nose, the U.S. dollar is not going to collapse anytime soon.
In fact, there's a dollar shortage right now, indicating it's the most in-demand fiat currency in the world.
Make sure you have three to six months of living expenses saved up just in case you're in a cash crunch.
Although gold is down along with stocks now, history tells us it should decouple and actually rise if stocks were to continue falling over the next couple months.
Take a look at what happened from October 2007 to March 2009... The S&P 500 dropped 56.1% while gold actually rose 16.8%. That's a difference of 72.9%.
We think something very similar could happen again today, especially as interest rates are at all-time lows around the world.
Action to Take: If you're worried about not being able to exit your positions if the market is closed, build your cash position to stock up on the most essential supplies. Then, buy stocks if they go considerably lower in the intermediate term. Buy gold as a medium- to long-term hedge against stocks.