Why You Should Invest in Precious Metals this 2019
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I honestly can’t predict when the next market crash is going to happen, but it certainly looks like we are heading towards severe devaluation and destabilization of the dollar as well as stock market crash at some point in the near future, especially concerning the US-China Trade War Row!
Investing in precious metals is a good way to protect your wealth.
The most common precious metals that provide you sustainability in your investment portfolio are gold and silver.
The main reason why people are not investing is due to a lack of knowledge.
Couple of questions we need to ask ourselves before investing in precious metals (from an investor perspective) are;
- What roles do precious metals like gold, silver, and platinum play in today’s financial markets?
- Are markets for precious metals efficient?
- Do precious metals provide valuable diversifying qualities beyond those achievable in a portfolio devoted solely to financial assets?
Beginner Investor Tip: For beginners starting-off with investing in precious metals, silver or gold may be the best place to start. To add, it’s always a good idea to diversify your investment portfolio by staring to integrate lesser-known metals like platinum, palladium, or copper.
So, below I would like to highlight some important aspects as to Why You Should Invest in Precious Metals this 2019.
Consumer Debt is Rising Dramatically
Student and household debt have risen to astronomical levels in recent years since the Global Financial Crisis.
Student loans now exceed a trillion dollars all by themselves.
Americans are continuing to purchase and spend despite the fact that 90 percent of them now make the same amount or less as they did following the Global Financial Crisis.
How much longer can this borrowing against the future go on?
Corporate Debt is at All-Time Highs
With the interest rates at historic lows, corporations used the unprecedented opportunity to borrow massively against their balance sheets.
Most of the corporations in the United States wasted most of their money on stock buybacks and executive bonuses and compensation packages.
Next to nothing went to increase productivity or investment in technology and in new business opportunities.
Now that interest rates are rising, they will have to service these massive debt burdens with future free flow cash.
This will represent an ongoing strain on their collective finances and balance sheets.
Big Banks are Holding their Lowest Capital Ever
Leaving them woefully unprepared for the next severe downturn or financial crisis.
With extremely low capital ratios, it does not require a large decrease in the value of their assets to tip them towards financial insolvency once again.
Remember the sub-prime mortgage crisis of more than a decade ago?
Shockingly, these toxic investments are back in business (under a new name of NPL’s non-performing loans) and are the fastest-growing holding and assets of banks once again.
Who said bankers were smart enough to learn from recent past mistakes.
The U.S. National Debt is the Highest in History
It’s no joke that $22 trillion worth of national debt is not only the highest public debt in the history of the world, but it is also completely unsustainable.
Rising interest rates will cause debt servicing to consume an ever large share of the government’s limited annual revenues (exceeding 10 percent of all government income imminently at today’s increased interest rates).
The higher the interest rates go, the worse this fiscal nightmare will become for Washington.
And it will only get worse with time.
Trends Reminiscent of the Dark Days
The S&P 500 is overvalued by more than 60%.
The CAPE ratio is extremely high at 26.84.
It has only been higher in 1992, 2000, and 2007, and as you know all of these years preceded major depressions, recessions, and financial collapses.
With that stat in mind, is it likely that we will continue to avoid the same outcome for much longer?
Major Investors Abandoning the Stock Market
We’re always told to follow the best investors, but most people aren’t aware that Warren Buffet’s Berkshire Hathaway holding company has been selling many of its top stocks, releasing more than 96% of their Johnson & Johnson shares and 97% of its Kraft Foods Group shares in the past few years.
Other investors like George Soros and John Paulson are doing the same.
Not Enough Cash to Go Around
More than a third of Americans don’t have any savings to fall back on.
That’s about 70 million people who would be struggling to survive within days or weeks of dollar’s devaluation.
About half of all Americans only have enough savings to last them 90 days or less.
Together, that means about 80% of Americans will be in deep trouble within 3 months of losing their income.
Troubles with the American economy will undoubtedly lead to a global chain reaction as they historically always do.
Investor Tip: Buying Silver Bullion should be at the Top of any Investors To-Do List. Silver has many industrial uses and will be in high demand in any economic climate, whereas gold is primarily used in jwelery and investing. In a dooms-day-like scenario, nobody will be worried about fancy necklaces and ETFs – buying power will the name of the game. Market watchers predict the price of silver could make a one-year gain of over 21% in 2019.
The desire to be prepared is ingrained into fundamental human survival instincts.
Investing in precious metals is a preventative measure that everyone should put high on their list of priorities, even in an ideal world.
Unfortunately, the global economy is far from ideal at the moment, with all three of the world’s top economies (US, EU, and China) carrying massive debt burdens that are only growing worse by the day.
I hope you enjoyed reading my blog post.
Let me know your thoughts or suggestions in the comments below.
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