Well, THIS can’t be good.
According to the results of a Rasmussen Reports poll, 34% of U.S. voters believe the country will see a second civil war sometime in the next five years.
You read that right. Over one-third of your fellow countrymen think the nation will be at literal war with itself in the years to come.
That’s an extraordinary figure. It is a testament to just how bad the social and political climate inside these United States has become. My guess is that not everyone who responded to the poll in a civil-war-affirmative way actually believes we’ll be shooting at one another inside of five years. But I don’t know. I’d like to say some of those respondents are thinking more in terms of a philosophical civil war, but that seems to be what we have right now. So, I’ll take the poll results at face value.
There’s unquestionably a large political divide separating the country. We’re treated to daily reports of violent protests that appear to transcend more singular causes such as justice for George Floyd. Rather, these protestsoften appear to be sourced in much broader political and social terms.
As for me, I think there’s something more to what’s going on than meets the eye. Those who’ve been paying attention know the economy has been weak long before the onset of the COVID-19 pandemic. For one thing, experts who spend time really digging down into the unemployment figures have long said the “official” U-3 unemployment rate has grossly understated the true number of jobless Americans. Moreover, the pre-pandemic U.S. economy was nowhere near as robust as government officials led us to believe. Last summer, a clear majority of economists projected recession was in our near-term future. And now the pandemic – with all of its terrible economic fallout – is here.
Am I saying that a weak economy really is what lies at the foundation of the social upheaval we’re witnessing presently? Not entirely. But there’s no shortage of research that shows a direct line can be drawn from social upheaval within a nation to great economic uncertainty. Given what we know about how truly weak the real economy was before the onset of the pandemic and current spate of violent protests, it’s reasonable to suggest those influences have acted to exacerbate the fears of economically fragile U.S. households.
For retirement savers, the challenge is to look past the noise and listen to what’s really going on. What truly is at the foundation of a poll result that says a large number of Americans are expecting civil war?More importantly, how does the answer possibly influence the kinds of decisions you might make on behalf of your own financial security?
National Economic Fragility Threatens Social Stability
The results of the Rasmussen poll clearly are disconcerting. But that is not the only survey about which I’ve read recently that raised my eyebrows. The University of Chicago’s National Opinion Research Center (NORC) conducted a poll in May that revealed something else rather startling:Americans are the unhappiest they’ve been in at least the last 50 years.
Again, I’ll take those results at face value. But here’s something else. The poll was conducted before George Floyd died in police custody, which also means before the outbreak of the violent protests prominently featured throughout the national landscape. That means the pandemic and its associated economic fallout was the lone, ongoing story of the day at the time the survey questions were asked.
When the poll was conducted, America was in various states of lockdowns and other restrictions on movement and freedom. Granted, those restrictions alone might have been enough to make some people feel miserable. But I wager it’s the economic damage that really is at the core of the collective misery. The unemployment rate reached the highest levels since the Great Depression, and some economists believe double-digit unemployment could be with us for the foreseeable future.On that same note, large numbers of Americans are missing their housing payments right now. 31% did so in May, and 30% missed in June.
On the small business front, the news is bleak, as well. It’s estimated that small businesses in the U.S. employ nearly half of all Americans. One-quarter of those small businesses are now at risk of shuttering their doors permanently.
And things could get even worse. You’re surelyfamiliar with the $600-per-week “bonus” being paid on top of standard unemployment benefits to America’s jobless. That additional benefit is scheduled to endJuly 31.
For added perspective, remember what I said toward the outset of this piece about how the economy already was distressed before the pandemic. In 2018, the United Way Alice Project published research results that showed 43% of American households could not meet basic living expenses. The last two years has yielded no update showing any improvement in that figure. So if nearly half of American households were struggling to stay afloat two years ago – before the pandemic, Depression-era levels of unemployment and widespread small business closure – it’s reasonable to assume the number of distressed households in America is even higher right now.
Experts Suggest Gold Could Be the Way Forward Amid Upheaval
The bottom line: A large number of American families have been dealing with distressed personal financial circumstances for some time. And as the nation’s financial circumstances worsen considerably, it’s difficult to imagine those profound strains are not a contributing factor to the unhappiness and even unrest we’re seeing throughout the U.S. landscape presently.
It’s worth noting that Greg Jensen, one of the world’s highest profile and best-regarded money managers, saw social and political upheaval on his radar screen at the beginning of this year. Jensen is the chief investment officer of Bridgewater Associates – the world’s largest hedge fund. Surveying the landscape as 2020 kicked off, Jensen said, “There is so much boiling conflict. People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.”And that was long before the COVID-19 outbreak morphed into a pandemic and the Floyd arrest triggered urban chaos across the country.
But even more important than the accuracy of Jensen’s social-climate prognostication was his disclosure of the asset he says is poised to benefit greatly from the upheaval: gold. According to Jensen, all of this “boiling conflict” could see the price of gold rise to $2,000 per ounce.
When Jensen made his prediction, gold was around $1,550 per ounce. It’s now at $1,800. That’s an increase of 16%.Given the fact gold-favorable conditions continue to mount,$2,000 per ounce doesn’t seem to be the lofty price target it was only recently.
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Francisco Blanch, head of commodities and derivatives research at Bank of America, agrees. That’s why in April BofAraised its 18-month price target for gold to $3,000 per ounce. If gold does indeed hit $3,000 per ounce, it would be an increase of nearly 70% over present levels.
Is a second civil war really in our near-term future? Not long ago, it would have sounded insane to ponder such a thing out loud. However, in light of the stark political and social divide that continues to grow throughout the country, the possibility no longer seems quite so ludicrous.
In light of the tremendous economic uncertainty that’s likely to accompany not only the ongoing social volatility but continued fallout from the pandemic, astute retirement savers should be giving serious thought to the future of their portfolios. No one knows what markets and assets will do, going forward. But when experts of the stature of Bridgewater’s Greg Jensen and Bank of America’s Francisco Blanch suggest gold is an excellent place to be as the nation – and the world – becomes an ever more tumultuous place to live, it’s certainly something to consider.