Outside Economics

Where Did The Economy Go 2nd Quarter?

Posted by Wendell Brock, MBA, ChFC on Fri, Jul 15, 2016

The economy this past quarter has been a great improvement over the first quarter. I am expecting some market stability as we head into the convention season and through this years election cycle. Who is elected will determine much of what happens next. We are however due for a recession soon, depending on which economist you follow. I fully expect we will see something in the next 12 to 24 months. 

Macro Overview 

The British vote to exit the EU (Brexit) was essentially a validation that a disintegration process of the EU is possibly underway, causing destabilization for countries throughout the EU. Britain’s vote may lead to other similar referendums, particularly with the Netherlands and France where populist sentiment is growing.


The British pound fell to a 30-year low versus the U.S. dollar following the outcome of the referendum. Conversely, the fall in value for the British pound can be beneficial for the country as Britain’s exports become cheaper worldwide and tourism increases as stronger foreign currencies come into the country.

The unraveling of Britain from the EU is not expected to be automatic or immediate and may take years for it to finalize. Britain would need to execute a divorce clause titled Article 50 of the EU agreement in order to move forward with the separation from the EU. Several member EU countries, including the IMF, are eager to have Britain expedite the exit in order to minimize uncertainty.

In the wake of the referendum’s outcome, international equity markets tumbled as uncertainty led the course. U.S. financial markets were incredibly resilient following the days after the British EU vote, with U.S. equity and bond prices all propelling to higher levels. 

The Fed’s plan to further increase rates this year took a different course as the repercussions from Britain’s EU vote are expected to lead to slowing economic growth and a sustained low interest rate environment. Some Fed watchers believe that the Fed may ramp up its stimulus efforts again with lowering rates should the EU and Europe’s economy falter.

Overshadowed by the Brexit news, the U.S. Census Bureau reported data that may help solidify the Fed’s wait to raise rates. Durable goods orders fell 2.2% in May, worse than anticipated. Such data is an indicator of whether inflationary pressures are present and if inconsistent expansion exists in the economy due to less capital spending.

In the midst of the Brexit turmoil, the Federal Reserve announced that 33 selected U.S. banks passed an imposed stress test to see how well they would perform under severe circumstances, such as high unemployment, recession, and falling asset prices. The stress test revealed that the 33 banks tested had nearly twice the amount of required capital needed, up significantly from the last stress test conducted.

Equity Update – Domestic & Global Stock Markets

U.S. stocks fared better than international stocks following Britain’s announcement on leaving the EU. U.S. equity markets were resilient once the surprise of Brexit unfolded, with the S&P 500 Index and the Dow Jones Industrial Index both positive for the year.

Domestic equities are more insulated from global developments and any other major equity markets since American companies generate 70% of the revenues from the United States. Japanese companies generate 50% from within their economy only and European companies generating a mere 49% from Europe only.

U.S. equities are considered attractive relative to negative yielding government bonds in Asia and parts of Europe, even as the U.S. 10-year note finished below 1.5% in June. The S&P 500 index currently carries 60% of its stocks with a dividend yield higher than the 10-year treasury bond yield.

The primary British equity index, the FTSE 100, tumbled in June following the Brexit vote. Companies within the index generate about 75% of their revenues outside the U.K., with many maintaining contracts and arrangements with other companies based in other EU countries. Since the actual extraction of Britain from the EU may take years, decisions for capital spending and expansion by European companies may be hindered.

Certain equity sectors are becoming increasingly sensitive to what the presidential candidates are proposing.  Concerns lie with those sectors where newly enacted regulatory policy can inhibit growth and profits. Other sectors are being adversely affected by low rates, such as banks whose earnings are hindered by low rates, which limits the amount of profits they can earn as deposits fall and loan rates drop.

Precious Metals, Oil & Gas, and Wages

Precious metals have increased dramatically this past quarter. Economist, Mark Skousen, said, “I think they (Federal Reserve officials) are working overtime to bring inflation back. Gold, which is finally moving, is the best indicator of future inflation. So we may see a return of inflation here if the gold market continues to rise. So that's what I'm looking at more than the bond market.”

Silver has rallied this year increasing nearly about $6.30 per ounce over the $13.83 at the start of the year. That is a 45.55 percent increase in price. For the past several days it has reacted independently of gold as gold prices have come down a bit; Silver has continued to go up. It seems there may be some hedging going on due to Silver’s expanded use in industrial applications. These are the highest prices for silver since the summer of 2014.  

Oil and Natural Gas are also on the rise. According to Dan Steffens, President of Energy Prospectus Group, (EPG) of Houston, TX, “The combination of rising demand and falling production has pushed the natural gas prices up from $1.70/mmbtu in February to near $3.00 at the end of June. My prediction is now we will see gas trading for more than $4.00/mmbtu by December.” If that is the case, lets hope all the global warming kicks in so we have a mild winter or we will be paying more than double for heat.  

With U.S. oil production down from last year, we are back to importing about 50% of our oil. Other countries are having production issues too, which may cause an increase up to about $70/bbl by the end of the year. Third quarter typically sees an increase in oil demand due to summer travel, which could easily eat up the surplus that has been keeping oil prices low. Some analyst think that oil will remain fairly steady around $50/bbl for the near future.

The Department of Labor reported that average hourly earnings grew by 2.5% over the past year, thus placing pressure on corporate earnings as wages move up. Many analysts believe that wages will continue to increase as unemployment rates remain below 5%, enticing companies to keep performing workers and paying them more.

After a market run up as we have seen this past quarter, I would not be surprised to see some profit taking in the next couple months, particularly if this earnings season does not produce any great results. If inflation takes off  then expect oil, precious metals, wages and other commodities to increase, which will certainly put pressure on corporate profits, and will also stress the markets. Now is a good time to continue to get out of debt and put a little extra away for a rainy day. 

Kind Regards,

Your Arm-Chair Economist


Sources: Eurostat, Department of Labor, S&P, Bloomberg, Federal Reserve, U.S. Census Bureau, EPG

"Education is what remains after one has forgotten what one has learned in school."  - Albert Einstein

Topics: Economy, Oil, Precious Metals, Interest Rates, Stock Market, Brexit

Must Read for People Who Have Bank Accounts

Posted by Wendell Brock, MBA, ChFC on Fri, Apr 15, 2016

The great recession has left its mark on many of us in so many ways it is hard to understand them all - perhaps similar for generations before with the Great Depression. One major mark is in banking. The Great Depression produced the FDIC which insured customer deposits and help provide a level of financial security to the banking system. Now Europe and the E.U. has lead the way with a “bail-in” concept where depositor bank accounts are used to shore up the troubled bank, thus taking the tax payers off the hook for failed banks. 

This week Austria put this to the test. Hypo Alpe Adria (HETA) collapsed under the weight of bad loans. The bank is located in the Province of Cimages.jpgarinthia, which has mostly controlled the bank for the past year, when it first started having problems. In taking on the obligation of this bank Carinthia is worried that it may cause the Province to file for bankruptcy as well.

The Austrian Financial Market Authority (FMA) in its role as the resolution authority for failed banks has issued the key features for the steps to resolution. The Bank Recovery and Resolution Act (BaSAG) outlines how the issues surrounding failed banks are to be resolved. The most significant are:

  • A 100% bail-in for all subordinated liabilities,
  • A 53.98% bail-in, resulting in a 46.02% quota for all eligible preferential liabilities,
  • The cancellation of all interest payments from 1 March 2015, when HETA was placed into resolution pursuant to BaSAG
  • As well as a harmonization of the maturities of all eligible liabilities to 31 December 2023.

Subordinated liabilities is simply another term for depositor’s money in the bank. In the typical banking arrangement the bank’s assets are the loans on the books, while their creditors are all the depositors. The exact opposite of personal or business finance, where loans are liabilities and cash deposits are part of their assets. 

This sort of “bail-in” can cause a lot of panic in finance world, simply because people losing their deposits can demonstrate some serious concerns about how well a bank is operated. Clearly an uncharted path. Some concerns exist over the legal as well as the practical aspects of the “bail-in” concept. This makes the creditors of the bank more responsible for how the bank is run. If there appears to be any problems creditors simply will not lend money to a bank or if they do they will demand a much higher risk premium. This will of course raise interest rates for everyone.

Corinthia attempted to remove the guarantees by purchasing the bonds at a discount from the bond holders, primarily Commerzbank, AG and Pacific Investment Management Co., (PIMCO), who rejected this offer last month. The creditors are demanding that Austria pay up if Carinthia cannot pay. In either case the depositor’s monies are gone.

This rule was put into place after the Great Recession to help relieve the burden on the tax payers for bailing out banks. The results are yet to be determined, but like every regulation there are unintended consequences. Some of those consequences maybe, higher interest rates, depositors being extra cautious where they deposit their paychecks, fewer loans made to small or medium size businesses, bankers will be unwilling to take risks with business owners on such loans. 


In The United States

You maybe asking yourself why does this bank in Austria matter to me? Here is the short answer; the United States banking regulators have adopted a similar rule. When a bank fails the regulators can force a bail-in of depositors monies to right the ship. Many people do not realize or understand that this can and most likely will wash up on the shores of America as soon as we have another major financial melt-down. Watching how this precedent action plays out may be an example of how it will work here in the States. 

I am clearly not suggesting that you take your money out of the banking system and hide it under your mattress, that would be foolish. Also I think that U.S. banks operate with safety and soundness regulations that help protect depositors money. This maybe one reason why gold and silver has shot up in price this past week. People still perceive precious metals as a safe haven for currency problems. 

Sources: Bloomberg, Financial Times, Superstation95
People should be more concerned with the return of their principal than the return on their principal.
-- Will Rogers

Topics: Precious Metals, banks, failed banks, Currency, Gold and Silver

China's Yuan Is Now In The IMF Basket

Posted by Wendell Brock, MBA, ChFC on Wed, Dec 02, 2015

When smaller, less developed countries from around the world need to exchange their currencies into a more utilized and liquid currency, they utilize SDRs (Special Drawing Rights), essentially a basket of currencies. Created by the IMF in 1969 to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and the U.S. dollar, SDRs have evolved to over $200 billion in value.

The SDRs are currently made up of four currencies, the U.S. dollar, the euro, the yen, and the pound. Over the past few years, China has been aggressively bargaining to have its currency, the yuan, included in the SDRs. Such an inclusion is considered a validation by the IMF that a country’s currency is internationally recognized and accepted.


In an effort to strengthen the world’s recognition of its currency, China has entered into currency swap agreements with other countries, bypassing the U.S. dollar as the reserve currency. Currently there are fourteen nations that have signed currency swap agreements with China allowing them to clear their trades using the yuan as the main currency. Those countries include: Argentina, Belarus, Brazil, Canada, ECB, Hong Kong, Iceland, Indonesia, Malaysia, Singapore, South Korea, Thailand, the United Kingdom, and Uzbekistan.

Monday, November 30th

The IMF announced that the Chinese yuan will be included in the SDRs basket of currencies. It is expected that the demand for the yuan will not increase much considering the currency controls of the Chinese government. Central banks have begun acquiring the yuan but they don’t expect to have a major increase in demand.

Central banks don’t use the SDR as a yardstick for determining the composition of their foreign-currency reserves. These are much more heavily influenced by cross-border trade, said Karthik Sankaran, a director of global strategy at Eurasia Group.

Before the currency swap agreements all trading with these countries and China were conducted with U.S. dollars as the reserve currency. While many policy makers don’t believe that the yuan will supplant the U.S. dollar anytime soon, no one thought the Chinese economy would grow to become as big as the U.S. economy anytime soon either.

The inclusion of the yuan in the SDRs Basket is a big deal to China, they view it as placing their currency value equal to that of the other currencies in the Basket. It’s a bit like letting the camel poke its head in the tent! Soon enough the entire camel is in the tent.

In our competitive world economy, China will continue to work at becoming the world’s largest economy and they will compete to become the world’s reserve currency. As the country with the largest population, they want to be a super-power on the world stage and set world economic standards. (Remember they are still a communist nation with limited human rights.)

With the fall of Bretton Woods system and increasing availability of credit through international banking institutions, SDR’s are not used as much as they were when they were first developed. After all we have left the gold standard back in the early 1970’s, which in essence changed precious metals (gold and silver) from a common median of exchange (controlled currency) to a commodity, greatly increasing their value and volatility, particularly as the currencies have been devalued over time.

What are your thoughts of this new development in the world’s economy?

Sources: IMF



"Peace and contentment come into our hearts when we save a portion of our earnings and avoid unnecessary debt."  - Ezra Taft Benson

Topics: Precious Metals, Yuan, SDRs, China, Currency

Correlation of Commodities

Posted by Wendell Brock, MBA, ChFC on Thu, Nov 20, 2014

Commodities, such as oil or gold, typically follow an inverse, or negative relationship with the value of the dollar. A stronger dollar makes oil a less attractive commodity on dollar-denominated exchanges, especially in the eyes of investors holding other currencies. When the value of the dollar weakens against other major currencies, the prices of commodities generally move higher.

This inverse relationship also happens when countries devalue their currencies through inflation. This is one argument for the gold standard, it is said to keep monitary policies honest.


There are many reasons why the value of the dollar has an impact on commodity prices worldwide, namely commodities are typically priced in dollars. When the value of the dollar drops, it will take more dollars to buy the same amount of commodities. Commodities are traded in dollars because currently the dollar serves as the world’s reserve currency. Some countries, like the BRIC’s (Brazil, Russia, India and China are trying to change that and use the Chinese Yuan as a reserve currency or a basket of currencies from other countries rather than simply the US dollar.

Another reason is that commodities are traded around the world; foreign buyers purchase our commodities: corn, soybeans, rice, wheat, oil, etc., with dollars they have received in trade as we have purchased products they have manufactured. When the value of the dollar drops, they have more buying power and simple economics tells us that demand typically increases as prices drop.

Commodity traders often keep a close eye on the value of the dollar. An easy way to monitor the dollar is to watch the price quotes on the Dollar Index on the ICE Futures Exchange. It is an index of how the dollar is valued against a group of other major currencies around the world. The price of the index is traded like any other futures contract and you can get quotes throughout the day.

Commodity prices don’t necessarily tick higher for every tick lower in the Dollar Index, but there is a strong inverse relationship over time. Individual commodities can also buck the trend if other over whelming forces are causing the price to move along with the dollar.

Lately the dollar has gained strength against a backdrop of many countries whose currencies are weakening. This has been a factor in the lower prices we have seen at the pump. This strengthening has also had an impact on other commodities, precious metals, gold, silver, platinum, etc.

Typically, gold is seen by investors as a backup for the dollar. As the dollar weakens, the price of gold increases. As the dollar gains strength, gold prices drop. It is similar to the relationship between the dollar and oil. Which begs the question, is there a correlation between oil and gold?

There are a couple ideas that try to explain the correlation between gold and oil. One is that prices of crude oil partly account for inflation. Increases in the price of oil result in increased prices of gasoline at the pump. If fuels (gasoline, diesel oil, and aviation fuel) are more expensive, then it’s more costly to transport goods and those prices go up. The final result is increased prices – in other words, inflation.

The second thought on the oil-gold link is the fact that precious metals tend to appreciate when inflation is rising (especially in the current fiat monetary environment). So, an increase in the price of crude oil can, eventually, translate into higher precious metals prices resulting in oil becoming a new economic bench mark similar to gold.

While it usually takes some time for higher commodity prices to materialize as higher prices in goods and services, however for precious metals they trade daily in your portfolio and may trade in line with oil immediately. One explanation can be that, once oil appreciates, precious metals investors correlate the expected future higher prices of goods in the price of gold and it generally goes up.

However, even though the general price level of gold moves in a similar direction to oil, the relationship may not be trade-able based on data for the long term. While the correlation is positive, over longer periods of time and on average, this relationship does not always translate the same for gold and oil returns.

In 2000 oil was trading around $32 per barrel and gold was around $292. Currently oil is trading around $75 and gold at $1,183. Which translates for oil a 134 percent gain over the past 14 years and 305 percent gain for gold. (Obviously, these are low compared to recent highs in the past few years when oil hit around $140 per barrel and Gold was up around $1,800 per ounce.) By comparison, in January 2000 the CPI was at 168.800 and January 2014 the CPI was 233.916 or an increase of 38.6 percent. The low inflation rate compared to the increase cost of oil and gold can partially be explained by the number of times the Government has revised the method of calculating the CPI.

Having said that, it’s still possible for short-term patterns to emerge occasionally. So, even though there seems to be no relationship between gold and oil returns over the long term, it may happen that a relationship unveils itself in a short period of time offering trading opportunities.

In summary, while oil prices do not drive gold prices and gold does not drive oil prices, the main reason the two markets have similar long-term trends, as well as other commodities, is that they have one important long-term driver in common: monetary inflation.

Topics: Gold, Oil, Precious Metals, Commodities,

Unproductive Rock or Real Value - The Gold Standard

Posted by Wendell Brock, MBA, ChFC on Wed, Nov 12, 2014

Authorities – monetary authorities, political authorities, economists – seem to know less about money than our forebears did. We’re approaching the centennial of the beginning of the First World War. From the late 18th century through the First World War we had the greatest increase in human wealth in history; in that one and a quarter centuries we created more wealth than all the previous centuries put together! And from about the First World War until now, the economy has been tinkered and toyed with so much that it is on the verge of a world-wide collapse!


A key element to the success of those 125 years was stable money, starting with the British pound. Before that you had the Dutch, but they didn’t have quite the global influence that the Brits ended up having, especially with the industrial revolution. The United States under Alexander Hamilton put in a very sound money regime that made the United States standout, especially in relation to the Latin American republics which achieved their independence in the following decades, but have been troubled ever since by chronic monetary instability.

Yes, the US had boom and bust cycles during those years, but most were related to normal business cycles and speculation, not due to the collapse of our currency – of gold and silver – the currency was always stable.

Money is a simple subject – however, the money authorities want to surround it with a lot of jargons and equations. They want to make it appear that even if you master brain surgery or nuclear science, you are incapable of understanding money, which is ridiculous. People instinctively understand that stable money is good and that a weak dollar is not good for the United States. Great countries don’t have a weak currency. Overall, people understand the stabilizing effect of a gold standard.

The last hundred years have seen a gradual withdrawal from the gold standard until in the early 70's, America went off it completely. This allowed for an expansion in the economy since money was no longer tied to anything and could simply be printed at will. Although the 70's were distinctively marked by the Misery Index, we had a decent time of it in the 1980s and ’90s when we had a semi-stable monetary policy, but we still haven’t recovered from the early 2000s.

Crises often leads to reform. Well, we did not return to a gold standard in the 1980s. Neither have we returned to a gold standard today. This nation is beginning to recognize that the Fed is floundering and that the central banks cannot manage economies.

Enter China.

China recently created the new Shanghai gold exchange. One of the purposes behind this new gold exchange is to eventually take global price controls for monetary metal away from the Comex, and then force a global currency reset by raising the price of gold to its true or actual value.

China plans to re-price gold to near or above twice the current price. This will have a devastating effect on derivatives and ongoing use of the Comex futures market to suppress gold prices, and protect the dollar.
Based upon supply details for the Comex over the past two years, America's primary gold exchange no longer settles their contracts through the delivery of physical gold, but instead settles in cash payments or through the hedging of gold using derivatives. Subsequently, once this failure to deliver takes place, then China, through the Shanghai gold exchange, will become the default market for price discovery. At that point they will re-adjust gold to its true value, instantly causing massive chaos in the fiat currency markets and leaving the world little alternative but to implement a complete currency reset.

Since the middle of 2012 or so, the Comex has been forcing gold contracts to settle not in metal, but in cash. If you don't like it, they will ban you from the Comex. There's been very little if any settlement of gold futures contracts for two years in gold metal. They're not a gold market anymore, they're a derivative market for gold instruments. And since late September, Shanghai has been offering a gold and futures contract, and they're settling in metal.

Several economic analysts, including John Williams, Peter Schiff, Dr. Paul Craig Roberts, and Gerald Celente all gave predictions earlier this year that a global currency reset event would take place in 2014, with most believing it would come before the end of summer. However, the U.S. is not on board with the rest of the world, preferring instead to seek military conflicts in order to delay the end of the petro-dollar system. Meanwhile, both Russia and China have accelerated their efforts to create infrastructures that will allow a more fluid transition for global trade once a currency reset actually takes place.US_Gold_Certificate

1922 US $20 Gold Certificate

Over the past several weeks, the dollar has grown in strength while the rest of the world's currencies have been collapsing. Because of this, global accumulation of physical gold at depressed levels is running near historic highs in an attempt to hedge sovereign currencies that have depreciated from years of low interest rates and slow money velocities.

As several global financial indicators are more intertwined and threaten to bring the world into an economic crisis, China has recognized that physical gold is the ultimate catalyst to force an end to the domination of purely fiat finance, and that revaluing gold to its rightful price will have the effect of both protecting their own currency, and wresting financial control away from the West and the system of dollar hegemony.

Alan Greenspan, who served at the helm of the Federal Reserve for nearly two decades, recently wrote an op-ed for the Council on Foreign Relations discussing gold and its possible role in China, the world’s second-largest economy. He notes that if China converted only a “relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system.”

In a world filled with fiat currencies, how important is gold’s role in the financial system? Proponents often view the precious metal as a hedge against economic chaos, while critics typically claim gold is hardly more than an unproductive rock. Interestingly, some countries appear to believe gold is quite important.

On November 30th the Swiss people will vote to return their currency to a gold standard, making their currency the first to be partially backed by gold since the US went off the gold standard in 1971. Maybe other countries will soon follow or they may be forced to by China.

Do you think the US should return to a gold standard? Is gold and/or silver a part of your Security Plan? 

Free Information about including Precious Metals as part of your Security Plan,  Click Here.

Topics: Gold, Precious Metals, Gold Standard, Security Plan

Economic Bubbles and What to Do

Posted by Wendell Brock, MBA, ChFC on Fri, Aug 08, 2014

Is there any doubt that we are living in a bubble economy? At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble.

carbon bubble

Another very troubling bubble that is brewing is the massive bubble of consumer credit in the United States. According to the Wall Street Journal, consumer credit in the United States increased at a 7.4 percent annual rate in May. That might be okay if our paychecks were increasing at a 7.4% annual rate, but that is not the case at all. Instead, median household income in America has gone down for five years in a row.

This pattern of bubbles is not isolated to the United States alone. In fact, the total amount of government debt around the world has risen by about 40% just since the last recession. It is never sustainable when asset prices and debt levels increase much faster than the overall level of economic growth. At some point a massive correction will happen. History has shown us that all financial bubbles eventually burst.

You know that things are serious when even the New York Times starts pointing out financial bubbles everywhere. Their definition of a bubble is “when the price of everything blasts upwards, obliterating the previous ceilings of historical benchmarks, it's a pretty good indication that you're in a bubble.”

The bubbles in the financial markets have become so glaring that even the central bankers are starting to warn us about them. For example, just consider what the Bank for International Settlements is saying:

“There is a common element in all this. In no small measure, the causes of the post- crisis malaise are those of the crisis itself – they lie in a collective failure to get to grips with the financial cycle. Addressing this failure calls for adjustments to policy frameworks – fiscal, monetary and prudential – to ensure a more symmetrical response across booms and busts. And it calls for moving away from debt as the main engine of growth. Otherwise, the risk is that instability will entrench itself in the global economy and room for policy maneuver will run out.”

This is quite a harbinger coming from the BIS. As for the “room for policy measures running out,” according to Jim Rickards, author of Currency Wars and The Death of Money, the Fed has two options at this point, they can continue to taper off the mass printing of money, which he says will lead to another recession within this depression. Or if they don't continue to taper, perhaps have a pause in printing and they increase their asset purchases, then that will signal to the market that the Fed must keep on printing and it will trigger hyper-inflation. This will cause the dollar to collapse and gold prices to increase.

According to the minutes from the Fed's June 17-18 meeting, the Federal Reserve is leaning towards ending the economic stimulus in October. Fed policymakers have been tapering their government bond purchases in $10 billion increments at each meeting since December, cutting them to $35 billion a month from $85 billion. At that pace, the Fed would be buying $15 billion in Treasury bonds and mortgage-backed securities by its October meeting.

Yet while Fed officials are planning on halting the bond buying, closing out the program will have another side-effect. The bond purchases have held down long-term interest rates for several years, spurring purchases of homes and factory equipment. The Fed has been planning on increasing the interest rates sometime in 2015, after all, they can't stay suppressed forever.

With all the bubbles that are out there, what will happen once the interest rates increase?

Is this sustainable?

Of course not.

None of these financial bubbles are.

So, what to do?

Now is a good time to be considering other options such as precious metals. Precious metals have always been an important part of a well-rounded portfolio. But with all the economic uncertainty out there, many people are beginning to insist on having some sort of precious metal not just in their portfolio, but in their hands. There are even a few states who have recently voted to accept gold and silver as legal tender. There is a reason why these precious metals have been the currency standard since Biblical times. In short, they don't lose their value.gold vs silver

There are many naysayers out there arguing that buying gold and silver is a foolish investment. Perhaps as an investment, they are right. But as a type of insurance against the consequences of the monetary manipulations and bubbles that are within our economy, maybe having some gold or silver in your hands becomes wisdom. How much to have dependes on your personal situation, 

We really don't know what the economy will look like in the next few years. We can look at history to see what typically happens when this type of mix of bubbles and monetary manipulation come in to play. We would be foolish to think that the results that happened then could never happen to us. Common sense tells us to be prepared. What does being prepared look like for you? I believe it is far easier to be prepared than to try and predict the future.

Topics: Economy, Gold, Precious Metals, Silver, Economic Bubbles


Wendell W. Brock, MBA, ChFC

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