Wall Street Worries, While Markets Shrug Off Risks


If you follow markets on a daily basis, you might be forgiven for thinking that everything is going just fine with the economy. Markets seem to be doing well despite high inflation, shrugging off every piece of bad news. Heck, bad news seems to be good news these days, and nothing seems to faze Wall Street.

But behind the scenes, Wall Street executives are quietly fretting about what’s coming down the pike. They know that the economy is in bad shape and that something bad is going to happen. The only question now is just how bad it will be.

What Wall Street Really Thinks

JPMorgan Chase CEO Jamie Dimon recently told a group of investors that he assesses the probability of recession as follows: a 10% chance of a soft landing, a 20-30% chance of a mild recession, a 20-30% chance of a harder recession, and a 20-30% chance of something even worse. Taking a closer look at those numbers, you realize that Dimon expects the chances of a hard recession or worse to be greater than 50%.

Asset manager BlackRock is similarly pessimistic about the direction of the economy, believing that there is no possibility of a soft landing. The company’s analysts believe that the Federal Reserve will have to plunge the economy into recession if it really wants to combat inflation.

That’s not terribly comforting news, especially coming from people who should be in a position to know what’s going on. And given how rosy forecasts from Wall Street often are, it could very well be that the reality of what will take place will end up being even worse than Dimon expects.

The reality is that consumer spending is slowing, manufacturing is slowing, and the economy is on the verge of a downturn. All but the most willingly blind can see what’s happening, and we all know that the risk of a 2008-style crisis can’t be discounted.

What makes this time different and potentially much worse than 2008 is that the next crisis will occur at the same time that inflation is at 40-year highs. The last time we experienced a situation like this was in the 1970s, when high inflation and a stagnant economy contributed to over a decade of misery.

The Real Cost of Inflation

We all have had to deal with inflation over the past year, and anyone who has filled up the pump or bought groceries has realized just how bad inflation has been. But the real cost of inflation may not be readily apparent, even to those who suffer from it.

The average American family is spending $8,607 more per year due to inflation, or about $717 a month. That’s a pretty significant amount of money, and really puts into perspective just how financially damaging inflation is and can be.

Markets may shrug off inflation numbers and think that the Fed has things under control. Pundits may look at the slightly lower year-on-year inflation numbers for July and claim that everything is doing just fine. But America’s families know better, and they’re suffering.

What’s especially frightening is that we don’t know how long inflation is going to last. We’ve been blessed with decades of relatively low inflation, so that we have come to expect higher prices in the future but only rising at moderate rates.

All of a sudden we’ve seen prices of some food staples rise 25-50% or more over the course of a year. And there are no signs that inflation is going to return to more manageable levels. While many millions of people probably expect inflation to return to “normal” within the next year, many more are starting to adjust their long-term inflation expectations.

How many people at the beginning of the 1970s would have guessed that inflation would eventually hit double digits within a few years? Probably not that many. And how many would have guessed that inflation would remain a problem into the early 1980s? Again, probably not that many.

For all we know, we could be on the cusp of another stagflationary decade, one which will see long and pronounced high inflation. And that high inflation could significantly hamper the recovery from a coming recession, which could disrupt and possibly destroy the financial dreams of many American households.

How Will You Protect Your Wealth?

Many Americans undoubtedly don’t have a financial plan for dealing with rising inflation. For too many, their only plan is to hope for a return to normal.

But what if that return to normal never happens? If we’re faced with a new normal, with years of high inflation and economic stagnation, how will you make sure that your savings and investments do what they were intended to do?

If you’re saving up a down payment for a home, how will you ensure that your savings don’t get eaten away by inflation?

If you’re saving up for your children’s college education, how will you ensure that they have enough money to pay for tuition?

If you’re saving up for retirement, how will you make sure that the money you’ve worked for decades to build up is actually there for you to use when you need it most?

Those are tough questions to answer, and tough situations in which to find yourself. But an increasing number of Americans are going to have to start answering those questions. And more are more Americans are finding the answer to their problems in gold.

Gold has been trusted as a safe haven asset for centuries, and its reputation for protecting wealth means that it is one of the first assets people flock to when times start getting tough. Gold tends to maintain its value and purchasing power over the long term, and can perform extremely well during times of crisis.

During the stagflation of the 1970s gold’s annualized growth rate for the decade was over 30%. And during the 2008 financial crisis gold gained 25% while markets lost over 50%.

Many people are banking on gold to perform similarly during a future crisis, and that’s why they’re positioning themselves now to take advantage of any potential future growth. Better to be prepared ahead of time than to be caught flat-footed once the crisis hits.

The options available to buy gold continue to increase too, with many people choosing to buy gold through a gold IRA. A gold IRA is just like any other IRA, only that it holds physical gold coins or bars rather than intangible financial assets. And you can roll over or transfer assets from an existing 401(k), IRA, TSP, or similar retirement tax-free, allowing you to easily convert your retirement savings into gold.

If you’d rather buy gold coins to store at home, there are a plethora of options available to you, with new and exciting coin designs being produced every year. No matter how you decide to buy gold, Goldco has options for you.

With over a decade of service to thousands of satisfied customers, and over $1 billion in successful precious metals placements, Goldco is one of the most trusted companies in the industry. So if you’re looking to protect yourself and your hard-earned savings against the risk of a coming crisis, contact Goldco’s experts today and learn more about how you can benefit from owning gold.

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About the Author: Paul-Martin Foss