With the financial decisions being made by both the U.S. and G20 nations to try and cope with the COVID-19 pandemic and mitigate its fallout, we are poised for a history-making financial crisis. While this likely means great things for gold as an investment, and we can still rely on it as wealth insurance, it also means it’s time to start considering a third role for gold: household insurance.
As household insurance, gold protects our purchasing power – the main financial component to maintaining our lifestyles and furthermore, our livelihood. Unfortunately, the threats to purchasing power are looming larger by the day:
· According to Goldman Sachs Global Investment Research, in just the last three months, the G20 nations and U.S. have exceeded the amount of quantitative easing done over three years of the Great Recession. And unlike the quantitative easing done between 2009 and 2011, which was capped, this round will be unlimited.
· The U.S. Treasury plans to borrow a record $3 trillion this quarter, which is nearly five times the previous record. It also expects to borrow another $677 billion the following quarter.
· The national debt has grown $1.5 trillion since March 1, which is a 6.4% increase.
· The deficit through March totaled $744 billion and is set to hit or exceed $4 trillion– the biggest shortfall in history.
· According to Bloomberg, “Speaker Nancy Pelosi is pushing Democrats to get out of the gate first with another multi-billion-dollar virus relief package.”
This list leaves out other important factors like the Federal Reserve’s junk bond buying program, its plan to buy $750 billion in debt and ETFs, and the persisting risk of negative rates.
Though it’s arguable whether these are the right decisions being made for our nation’s future, what is inarguable is the effect each one of these actions has on our purchasing power.
Unlike the dollar, gold and silver isn’t at the mercy of our government. They are a store of value, so even when the dollar is eroded, those who hold physical metal will still have the purchasing power to meet their needs. This is gold and silver as household insurance – a relatively small amount on hand that is easy to liquidate to cover a few weeks or months of expenses. It’s there to cover your present while your wealth insurance protects your future.
The good news is that gold and silver are still on the rise and the dollar hasn’t fallen yet, so it can buy more gold now than it will likely be able to buy in the future. This means that now is the time to make your dollars work hard for you by buying precious metals.
If you haven’t considered physical gold and silver for yourself or your clients, please contact me today to discuss its benefits and our recommendations on allocations for wealth insurance, household insurance and investment. We also work directly with highly reputable depositories to safely and securely store your physical gold and silver.