America has been the world’s Energizer Bunny since the country was founded in 1776. We have worked harder and longer than most, but we’ve also indulged in every form of addiction there is. From eating disorders to sex addiction, drinking disorders to drug addiction, and leading the way in the new millennium, we’ve found a way to suffer from a personal debt, student debt, and national debt addiction. We work more hours and hold more jobs than practically any previous generation. America works hard and parties harder, but except for the top 1%-10% somehow manages to lose financial ground every day. Like a hamster on a wheel, we’ve found a way to run harder, but unfortunately, not without taking on some additional addictions all along the way.
Investors have been making money with the stock market for a decade and the thought of yanking the needle out, at this point, is too unbearable for some. But analysts who called the 2008 downturn are doubling down on a catastrophic end to our current economic condition. The worst part of their overlapping agreement is that it won’t be a complete recovery in ten years like last time. Instead, it will be a deeper and quicker collapse. Further, the recovery will take ten years on the short side, closer to twenty years in the opinion of many, and some are calling for an even longer recovery period. So, millennials had better get an early start on retirement savings, because their ability to profit over the coming decades is going to be severely hindered and Corporate America’s debt addiction plays a big part in the approaching economic storm.
$1.2 trillion in cheap Fed money was borrowed by public corporations, which was earmarked for wage increases, inventory expansion, and infrastructure to support growth. But $1.3 trillion was instead spent on stock buyback programs, which temporarily inflated stock prices, reduced the volume of outstanding stock, and qualified executives for additional company bonuses. The result is an entire swatch of public companies that have little to no liquidity, an emaciated infrastructure, and who couldn’t take advantage of a growth opportunity, if the perfect opportunity presented itself. As an example, Anheuser Busch, one of America’s greatest success stories, carries a debt load more than four and a half times greater than their EBITDA! This type of leverage ploy is common among large companies, particularly near market tops, which only reinforces the concern. You might think the 2008 collapse would make investors leery of CDO’s and other debt addictions, but like heroine, it only forces them to continue chasing the dragon.
Liquidity is an investor’s ability to buy or sell instantly, without moving the price. Wise and sober investors understand this well. They liken liquidity to oxygen, because you can’t live (or be successful) without it and you’re not even aware of it, until it’s gone. These sensibilities seem to be impaired for most investors nowadays. Those thinking clearly are realizing that physical gold and other precious metals still provide all of the investment hedging benefits, but perhaps now more than ever, represent one of the year’s greatest outright investment opportunities. Don’t wait to pay more. Call the experts at American Bullion, at (800) 653-GOLD (4653), while gold, silver, and other precious metals are still distant from all-time highs.
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.