Once achieved, wealth is not something easily given up. That’s why it’s important to pay attention to those who have the most to lose, during difficult economic times. However, many in the middle class mistakenly assume that the top 1% (American oligarchy) meet in secret and sequestered rooms to discuss the country’s economic direction, like the old days of Jekyll Island. But with today’s technology, many of the wealthy are more than happy to discuss concerns in an open and public manner. In addition, even with “private” meetings, at for example the recent G-20 summit, results and discussions are frequently announced or leaked or can be reasonably inferred based on subsequent policy coordination.
When it comes to big money investors, sovereign wealth funds frequently occupy the top spot. They are responsible for investing a country’s reserves from trade or natural resources in bonds, stocks, hedge and private equity funds. Therefore, they are well-connected, well-funded, and well-informed. One of the largest is the Government of Singapore Investment Corp, with over $354 billion in assets. It’s CEO, Lim Chow Kiat is not the least bit secretive or shy about sharing his belief that, “valuations are stretched, policy uncertainty is high” and investors have become too complacent.
Bill Fleckenstein, a well-respected trader and hedge fund manager says, “They are trying to make the stock market go up and drag the economy along with it. It’s not going to work!” Paul Craig Roberts, a well-respected economist and journalist says, “At any time the Western house of cards could collapse. It (the financial system) is a house of cards. There are no economic fundamentals that support stock prices…(or) the strong dollar.” And John Ing, CEO of one of Canada’s oldest and most successful investment dealers says, “The 2008 collapse was just a dress rehearsal compared to what the world is going to face this time around. This time we have governments which are even more highly leveraged than the private sector was. So this time the collapse will be on a scale that is many magnitudes greater than what the world witnessed in 2008.”
The mentality all these experts agree on is “hope for the best, but prepare for the worst.” The biggest potential losers from this degree of collapse will fall into two groups; those who hold wealth in digital form, such as stocks, bonds, money-market funds and bank accounts and those who rely on fixed-income returns such as life insurance, annuities, social security, and bank interest. Digital investments are easy to freeze and fixed returns will lose value due to government’s need to resort to inflation, in order to deal with the monumental debt collapsing on them. The obvious solution is physical hard assets, such as gold, silver, fine art, land, and private equity with written contracts, not digital records. Today’s precious metals availability and prices should have investors preparing and stocking up, now!
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.