Can You Still Build Wealth in the Faltering Global Economy?James Cordelaine
Perhaps it’s because we’re less than a year away from a national election, but when we discuss economic growth or contraction, we tend to focus on what’s happening in the U.S. But if we’ve learned anything from the recent currency devaluations and difficulties in China and their catastrophic effects here, it’s that we live increasingly in a world economy and less in a national economy. These days if Beijing sneezes we’re all headed to the ER.
One nation’s manufacturing setbacks quickly develop into another’s plummeting stock market and one country’s cutback on exports ultimately translates into another’s loss of jobs. Also of particular and immediate concern: how plummeting oil prices are dramatically affecting the economies of both developed and emerging nations. Two separate reports from prestigious international organizations have recently highlighted big economic changes in the global economy at large.
According to the International Labor Organization, a UN agency which monitors labor standards and social protection, more than three million people will become unemployed throughout the world in the next two years. This means in two years, unemployment will top more than two hundred million for the first time ever. Depressed oil prices remain the root cause of widespread joblessness, logging in under thirty dollars a barrel, the lowest in thirteen years.
Meanwhile, the International Monetary Fund (IMF) has just downgraded its forecast for both global and U.S. domestic economic growth during the next two years. The Fund’s global projection is now two tenths of a percent lower than it was just last fall. IMF economic counselor Maury Obstfeld says he expects this year to be “[one] of great challenges …growth expectations seem to fall consistently.” Worryingly, the IMF has also downgraded its forecast for the U.S. economy, projecting reduced growth that will plateau over the next two years at just 2.6 percent.
It’s certainly a year in which the big guys set negative financial records. The Shanghai Composite Index is off a whopping twenty percent from last year’s high; and its growth rate is down almost seven percent for 2015, its slowest rate of growth in twenty-five years. Not to be undone by its Asian counterpart, the Dow Jones Industrial Average has just got off to its worst two-week start for the beginning of a year – ever.
So given this gloomy global forecast, can an individual still accumulate the nest egg he or she will need to support them throughout a retirement that will likely last decades? But perhaps, instead of trying to fight the headwinds of stock markets—against which you will lose, you adopt a more pragmatic approach. What if, as in judo, instead of trying to combat force with force, you adapt your strategy to the situation? If stocks are flying every which way you can exhaust yourself trying to outsmart them – and ultimately lose, or you can change tactics and move to tangible assets that hold value no matter what the stock market here or anywhere else does.
This is particularly true when you need a literal safe haven to protect the buying power of your savings over the longest haul, retirement, when your ability to earn declines or stops. To paraphrase legendary right fielder Wee Willie Keeler, be where they ain’t.
By buying gold for direct purchase or through a gold IRA, you’ll safely bolster your nest egg with a tangible asset. And unlike stocks, which will sink in value as the global economy contracts, your own personal wealth will expand, because you’ll already own what everyone else wants.