Prior to the presidential elections, analysts warned that the U.S. economy would have bigger challenges to face than in almost any prior election. Threats of yet another nationwide shutdown, talk of increased taxes, and plans to cut funding for some of the most vital job sectors have brought upon dismay. What does it really mean for the overall American economy to transition to an administration that optimistically approaches the volatile concept of redistribution of wealth?
After the inauguration on Jan. 20, half of America became even more distrustful of where America is headed. In addition to the insecurities that have been perpetuated by doubts in American politics, weaknesses in the stock market have recently been exposed and abused. This has not only created extreme volatility that can disrupt traditional investment strategies, it heightens the already existing skepticism of conservative economists.
Today’s economy largely reflects patterns of inconsistencies similar to that of the cold-war era. During turbulent economic times like these, people scramble to get a hold of securing their fiscal assets. Throughout the cold-war era, the price of gold skyrocketed, many argue that this is largely due to similar socio-political division and economic instability that are prevailing today.
Your Financial Stability Throughout Another Nationwide Shutdown
Starting with the response to the COVID-19 pandemic, Biden said he will make sure all U.S. citizens will have access to reliable and free testing on a regular basis. The new administration also wants to impose mask mandates across the country and ideas of another month-long shutdown are being tossed around. What will another nation-wide lockdown mean for businesses?
Let’s first take a look at what the first lockdown costs us.
The national GDP dropped 32.9 percent, the highest drop in recorded history. (Gross Domestic Product | US Bureau of Economic Analysis (BEA)) This is unprecedented given that the 1958 recession brought a -10 percent drop for the American GDP. To put this in perspective, America’s economy was four times worse than during the Great Recession.
Stock Market Volatility
With advanced technical practices that have never been seen before, it is evident that America’s economy may be heading into one of the most elevated and volatile states we have ever seen. Retail investors are entering the market at record numbers because of the ease and opportunity. They are also the ones who are solely responsible for the entire short squeeze of multiple stocks like GameStop and AMC Entertainment that occurred in the last week of this January.
This is the beginning of market disruption, it is vital to consider the possibilities of this happening again in the next few months or even years.
Considering the unexpected, out of the ordinary practices that took place, long-time investors are now squirming to secure their own finances. This has been the biggest short squeeze in 25 years, according to Goldman Sachs. The GameStop short squeeze taught economists and investors that the market isn’t responding to traditional practices. We can expect to see more squeezes at times of elevated market volatility, which seems consistent with the start to 2021.
Increasing the National Debt
These times are not only unprecedented, but the government’s response to current issues is resulting in Americans feeling even more insecure about their finances and the security of their families.
Following one of the most highly-contested U.S. presidential elections, gold prices initially ticked higher on contested results that facilitated the deterioration in the risk sentiment. Prices of the precious metal had increased almost an entire 3 percent in the days following the U.S. Election. These numbers did not get touched by the attack on the stock market because gold, silver, and other precious metals cannot be short squeezed, according to Goldman Sachs.
What will affect you at home, however, is the bold plans proposed by the new administration.
“Biden’s economic proposals will result in an increase in the federal government’s budget deficits and debt load, particularly early in his administration. Under his proposals, the budget deficit on a dynamic basis will be a cumulative $2 trillion greater during his first term and $2.6 trillion over the decade. Publicly traded federal debt as a percent of GDP will increase from 108 percent when he takes office to 120 percent by the end of his term and 130 percent by the end of the decade,” it is said in the Moody’s report “The Macroeconomic Consequences: Trump vs. Biden.”
This proposal also includes $1.3 trillion for infrastructure, $2 trillion for climate change initiatives, and another $775 billion for caregiving programs. This laundry list of expenditures is bound to have long term effects on everything from our personal savings to the stocks market.
The increasing balance sheet of the FED has resulted in a flush of liquidity in the country and in the international markets. Currently, the U.S. central bank’s balance sheet is higher than $7 trillion.
There is a time where that debt will be collected, the question is how will you protect yourself from being affected by these consequential bills?
Taking into consideration that the American people themselves will ultimately be the ones to pay for Biden’s overambitious spending and the fact that something so seemingly reliable—like the stock market—has now been exploited, how many ways are there to truly invest and protect your money in a secure way?
Moreover, the current path of massive fiscal spending, very low interest rates, and a weak dollar that is more than likely to remain in place for the foreseeable future, are paving the way for the bullish outlook on gold and silver prices in the coming years.
Be prepared and do your own research on what are the best ways to secure your finances. Gold, silver, and precious metals are an age-old way to secure your finances physically. Considering the lack of trust in today’s administration and witnessing the markets trending as they are, precious metal coins and billions may be one of the best ways to ensure the value of your money in relation to today’s markets.
About Reagan Gold Group
The Reagan Gold Group is a privately-held company based in Los Angeles that helps clients diversify their portfolio by acquiring physical gold and silver coins, or by adding physical gold and silver to an existing IRA account.
We are not advisors in stocks, mutual funds, bonds, annuities, cash, or any other investments that are paper. However, we are experts and consultants in precious metals investing for diversification purposes. Therefore, we don’t see precious metals as a replacement for your paper investments; we see them as an asset that can help you maintain a balanced investment portfolio. As investors ourselves, we take pride in helping others invest in an asset that has helped countless nations, families, and individuals to preserve their wealth throughout history.
Maintain a balanced investment portfolio & diversify your portfolio by acquiring physical gold and silver or by adding physical gold and silver to an existing IRA account. Our IRA commodity specialists will guide you with the IRA Admission Form to help individualize your portfolio in order to serve your unique needs. Sign up online at https://reagangoldgroup.com/investors-kit/ or call 1-888-634-1523 to start your approval process, if you are eligible, you will receive our FREE Precious Metals IRA Investors Guide.