Over the last week we have shared the insights from the upcoming In Gold We Trust report in 6 short easily digestible articles. If you missed them, we consider them a must read for any world participant (i.e Everyone!).
Why? Because unless this time is different (and it never is), we, on any measure, are getting very close to the next recession. Recessions differ in magnitude and impact. We are clearly on record believing the next will be one of the worst in history and that Australia is very unlikely to escape like we did the last 2 times. Our 29 year record breaking run is looking near to ending.
Recessions also differ in how people come out of them. Some people, the smart ones who prepare and plan, can actually come out much better off then how they entered. Often in a transformational way. Others goes broke.
What the world’s longest bull run can do is create a whole generation that believes they are bullet proof, that this time is different. YOLO (you only live once) is part of the millennial vernacular, justifying living beyond your means. This is not helped by monetary stimulus enriching the 1% at the cost of the rest and the disenchantment that engenders. A recent study by the US’s Varo Bank found the following disturbing setup in the US:
- 60% of millennials don’t have $500 to cover their rent or food expenses in the event they lose their jobs in the next downturn.
- 50% of all respondents said they didn't have $500 saved.
- 45% of all respondents said they don't have a savings account. Of those who do, less than a third knew what interest was and over half of those were receiving less than 1% interest.
- YOLO trumped financial wellbeing for 41% of respondents, typified by 35% who believe saving for an experience was more important than a savings account.
- Only 24% believe that saving for retirement is essential.
History has shown too that Rich Listers disappear from such lists as what looked like wealth (assets) was overcome by the debt often ignored or not disclosed. The ultra ‘wealthy’ too are often guilty of YOLO combined with hubris, or being ‘bullet proof’ and living beyond their means.
The last instalment
of that In Gold We Trust report showed how gold and silver perform in recessions compared to shares. More data out of the US last week confirmed their property market may be headed in the same direction as ours. A recession can see that turn sharply worse as they saw in the GFC.
Those who are prepared to trust the overwhelming data, trust their gut, take action to sell overvalued assets and buy undervalued defensive assets such as gold and silver, and remove banking risk
may well be in the position where they sell those assets at a post recession high and buy those bargain shares and properties with the proceeds, setting themselves up for life.
And yes it is true you only live once, but you will likely live a long time. You may well be presented with a once in a lifetime opportunity now to set up that life to be truly one full of ‘experiences’ few could afford by taking them all now.
Bill Holter said it well over the weekend:
“If you see a house burn down, the only thing left is the foundation. That’s the only thing left because the foundation doesn’t burn. That’s what gold and silver are, and that’s what’s going to be left when this house of financial cards burns down.”