As we expressed back in September, wealthy Americans are preparing for a serious recession. Bloomberg today confirmed that the trend is continuing and even accelerating. Our initial report was triggered by an annual Union Bank of Switzerland (UBS) report on the world of family offices (private wealth management offices that handle investments and finances for super-rich ($1.2 billion net worth average) individuals and families). Today however, Bloomberg is reporting that in a statement from Paula Polito, a client strategy officer with UBS, a majority of super-rich investors anticipate a significant stock market drop before the end of next year and further that the U.S./China trade dispute is their top geopolitical concern, while the impeachment and 2020 election race is stealing the domestic stage.
A quote from Polito states that “The rapidly changing geopolitical environment is the biggest concern for investors around the world.” Additionally, “They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.” So, in spite of current media coverage touting the potential nearness of a 1st Phase China Trade Agreement, the super-rich still aren’t swinging at the pitch. That’s probably because they realize when it does happen we’ll be right back where we started the year, although both sides will have paid a substantial price in an effort, patience, and especially GDP. Even though Phase 1 was meant to generate momentum through a series of agreed-upon minor points, it essentially did nothing more than waste a year of time, generate distrust rather than agreements, and substantially add to investor reluctance, as well as the global economic slowdown.
In a survey compiled between August and October and completed by investors with at least $1 million in investable assets; nearly 80% feel market volatility is likely to increase, 55% agree with the super-rich that we’re likely to experience a significant market sell-off before the end of 2020, and 62% plan to increase diversification across asset classes. Two asset classes potentially poised to receive a lion’s share of newly diversified funds are cash and gold. Cash is receiving consideration due to its high value compared to practically every other world currency and gold due to its long history of increasing in value, particularly during difficult geopolitical times and during a falling market.
On a global level, we’re dealing with trade troubles, currency devaluations, and a growing recession. On a domestic level, we’re dealing with political strife, trade concerns, and a slowing domestic economy. In addition, we’re adding at record speed to a nearly insurmountable national debt. And even though we’re hearing that unemployment is still near record lows, it’s important to realize that the number of high paying manufacturing jobs is way down, while the number of service-related jobs is picking up the slack, but the average manufacturing position receives a $58,000 salary, while the average service-related position is closer to $25,000. Times are tougher than ever for many and those with money need to be prepared for the coming downturn. Preserve your assets, family, and legacy with the time-tested protection of physical gold and other precious metals.
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.