Groupthink is a powerful thing. It wasn’t that long ago that most people seemed to think that the US economy was just fine, even hot. Consumer spending was strong, the unemployment rate was low, and markets were still incredibly high. But the reality was that there were severe problems underneath the hood, and everything wasn’t as wonderful as it appeared.
It gives no one any pleasure to be proven right when issuing a warning, especially when it’s a warning about a coming recession. The reason most people warn about the issues is to make sure that people are aware of what’s coming, and to prepare themselves so that they don’t end up financially damaged as a result of a future recession.
But too many people want to believe that the party will last forever, and that the good times will roll on indefinitely. Everyone loves to see the value of their 401(k) or IRA accounts climbing. But no one likes to see them lose value.
Many people are so invested in their financial accounts that they fail to see what’s going on right in front of their very eyes. They’ve managed to convince themselves that everything is alright, that the Fed will ride in to the rescue, or that every dip in the market is just a buying opportunity before stocks inevitably rise once again.
Far too many people ignore the warning signs before a recession, thinking that everything is going to be alright. They maintain wishful thinking all the way to the bottom. And many of them only see reality once it’s staring them in the face.
Unfortunately, many of them decide then to protect themselves only then, and do so by exiting markets. But all they do is lock in losses and cost themselves dearly once the economy recovers. Had they been prepared ahead of time, and taken steps to protect their wealth before the recession hit, they may have fared far better.
What Has Changed?
So what has changed in the last couple of months that is leaving so many people bearish? In a recent survey, 68% of US CEOs stated that they believe the Federal Reserve’s efforts to combat inflation will result in a recession.
That’s not an unusual belief, and it makes sense. After all, the major reason stock markets are still as high as they are is because the Fed has continued creating more and more money over the past few years.
Now that the Fed has finally gotten serious about inflation and realizes that inflation is a problem, Wall Street realizes that the “Fed put” isn’t there. There isn’t anyone to backstop markets, there isn’t anyone to sop up trillions of dollars of government debt and mortgage-backed securities. There isn’t anyone who will bail out profligate financial institutions.
From now on Wall Street can no longer play with house money, it will have to absorb all losses itself. And that return to market discipline could end up being very painful.
The Fed has stated quite clearly that it will continue its tightening policy until inflation is brought under control. And given the fact that the Fed pumped more than $5 trillion into the financial system over a period of more than two years, it could be a while before the Fed is finished.
While everyone liked to make fun of the bears while the economy seemed to be doing so well, now that reality is setting in that the bears were probably right all along, that realization hurts. Even worse, the next crisis could be worse than many were expecting.
It seems like only a few months ago the only discussion of recession thought a mild recession might occur in 2023 or 2024. Now more and more people are talking about hard landings, stagflation, and years of potential misery.
Between high inflation, potential food shortages, and the numerous what ifs facing the economy, the future seems more and more daunting every day. But is there anything you can do about it?
Gold and Your Future
Thousands of Americans have already taken steps to try to protect themselves and their financial assets. They realize that if they want their wealth to remain safe and secure, they have to take proactive measures to do that. Waiting until the middle of a panic to try to protect your assets is almost guaranteed to ensure that you suffer the maximum amount of financial pain.
Many of these Americans who are protecting themselves today are doing so by buying gold, as they saw how well gold performed during the last financial crisis. During the same time period that stocks were falling over 50% from 2007 to 2009, gold gained 25%. And gold continued to make gains for years thereafter.
If you suffered major losses in 2008, you probably remember the feeling of despair, of not knowing when you were going to stop seeing red. You may have wondered when markets were going to fully recover, or if they were going to recover.
Those were tough times, and experiences that no one ever wants to face. So why put yourself at risk a second time? We don’t know how bad the next crisis will be, but there’s a definite possibility that it could be worse than 2008.
And a real worst case scenario could see stocks returning to a 1970s-type situation in which they move up and down for years without making major headway. Just look at the performance of stock markets between 1966 and 1982 and you’ll see the kind of future that Wall Street fears.
But you know what performed well during the 1970s? Gold.
Over the course of the 1970s, gold’s average annualized gains were over 30%. Not only did that blow markets out of the water, it was significantly higher even than inflation, which peaked at 11%. With tremendous performance during the stagflation of the 1970s and the aftermath of the 2008 crisis, it’s no wonder so many people are turning to gold today to protect their wealth, hoping that gold will work its magic once again.
From buying coins and bars to opening a gold IRA, there are numerous choices available to suit everyone’s needs. The question you have to ask yourself is whether you can afford not to buy gold.
If a major recession occurs, or the economy enters a stagflationary crisis, how will your savings and investments fare? Will you have enough time to recoup your losses? Can you assume that the next recovery will be quick and easy? What will you do if it’s long and protracted?
Those are all tough questions that you have to ask yourself. And if you think protecting your assets with gold may be the answer, call Goldco today to learn more about how gold could help you safeguard your savings.