If you thought that 2021 would provide a return to normality, a turning of the corner from the events of the last year, you’re probably shaking your head wondering what has happened. Rather than exiting the political and economic morass that began in early 2020, we seem to be getting ourselves mired deeper into it.
For both consumers and investors, the rising amount of uncertainty about the future has them on edge. Everything we took for granted has been upended over the past two years, and everything we thought about the future seems completely up in the air.
Every cloud has a silver lining, however, even the cloud that’s hanging over the economy right now. While the prospects for the future may be disheartening in some areas, there are others in which the economy’s woes are reason for, if not rejoicing, at least hopefulness about the future. And that includes precious metals like gold and silver.
Gold and silver have traditionally performed well when the rest of the economy struggles, particularly when stock markets crash or when inflation spirals out of control. When times get tough, people flock to the safety and stability of precious metals, and today is no exception.
Demand for gold and silver investment products such as precious metals IRAs continues to rise. And with the economy showing increased signs of weakness, that increased demand shows no signs of abating. Keep your eyes on these three factors in assessing just how much of a boost gold and silver will get.
Inflation is probably the topic that’s on everyone’s minds right now. Prices continue to rise throughout the economy, from food to fuel to housing. Not a person in the country has been unaffected by inflation. And the problem could very well get worse.
With over $4 trillion created by the Federal Reserve over the last year, it shouldn’t be any wonder that inflation is spiraling out of control. Every month brings new data demonstrating larger and larger rises in the inflation rate. And the Fed has just recently dropped its assertion that inflation is merely transitory, explaining instead that we may not even see inflation fall next year.
That kind of talk is why more and more investors are fleeing traditional investment assets and investing in alternatives such as gold and silver. It has been 40 years since markets faced the same combination of headwinds we’re facing today, and most investors are unprepared for that.
But there are others who realize that gold and silver could perform very well in the face of this inflationary threat. The last time there was a significant sustained inflation, during the 1970s stagflation, gold and silver’s annualized gains were over 30% per year over the course of the decade. And some investors are hopeful that gold and silver could provide similar performance today, especially if inflation continues to rise.
With the advent and adoption of COVID vaccines, many thought the days of lockdowns were behind us. But recent events in Europe and Africa have proven that wrong.
While the delta variant of COVID may have been a dud in the US, the omicron variant that is receiving increased media attention has some wondering whether it could be a game changer. With countries such as Austria having already gone back to strict lockdowns, could it be only a matter of time before we face lockdowns and quarantines once again too?
Markets have already begun to start pricing the risk of further COVID outbreaks, and it doesn’t look pretty. No one can predict how far the virus will spread, how deadly it will be, or how governments will react. But if you remember how stock markets performed in early 2020, you’re probably watching what’s going on now with rapt attention.
The last thing investors need is more lockdowns. But then again, gold and silver performed really well during the same time period that stock markets faltered. So if more and more governments decide to lock down their economies, the situation could nonetheless remain bullish for precious metals.
3.) Economic Performance
It’s hard to remember that COVID has occupied our attention for less than two years. In some ways it feels like it’s been with us for years. And that can make it hard to remember that the economy hasn’t been in great shape over the past few years.
Markets were already starting to show signs of weakness in late 2019. The Fed stepped in with monetary stimulus, assuring us that everything was alright and that there was nothing to worry about.
Then COVID came onto the scene, and now our memories of the pre-COVID era are dashed to bits. So it’s not surprising that some investors don’t remember that the economy was already on the outs before COVID hit. It’s only through the inflationary monetary stimulus of the Fed that markets haven’t already succumbed to a crash. But that double-edged sword has brought with it its own set of problems.
Deep down, the economy still is not in a good place. And labor shortages, chip shortages, high inflation, and everything else that has transpired over the past two years haven’t made anything better. The economy is just as weak, overpriced, and due for a correction today as it was two years ago. And that correction could come at any moment.
Economy in a Precarious Position
The reality of the situation is that the U.S. economy is in a precarious position. The better investors understand this, the better their ability to weather the coming crisis could be.
Many investors have already made the decision to protect their assets with precious metals such as gold and silver. They understand that times of economic uncertainty and crisis are going to upend conventional wisdom. And they realize that buying and holding precious metals could be a useful hedge against a worsening economy.
If you’re worried about the future of the economy, and about the future health of your savings and investments, maybe it’s time to start thinking about buying gold and silver. The precious metals experts at Goldco are ready to help you answer your questions about why gold and silver have been trusted for millennia to protect wealth.
Don’t let your hard-earned investments fall victim to rising inflation and a worsening economy. Call Goldco today and start learning about how you can safeguard your savings with gold and silver.
Trevor Gerszt is founder and CEO of Goldco Precious Metals, a privately held retirement services firm in Los Angeles specializing in wealth and asset protection. Offering a range of investment accounts including traditional, self-directed and Self Storage IRAs; as well as IRA rollovers, Goldco has been named the #1 gold IRA provider in the U.S. by Inc. 500.
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