Both precious metals and equities have stumbled recently. Oftentimes, pullbacks in asset classes that have been motoring along for a while can serve as good buying opportunities, as long as the underlying fundamentals remain supportive. Recently, Citigroup made news when the mega bank announced it was passing on the equities dip in favor of the one in gold. Citi analysts have concluded the volatile sociopolitical landscape characterizing the U.S. right now bodes well for safe-haven assets and poorly for traditional risk assets.
On that note, I’m thinking more and more about what the foreseeable future appears to have in store for all of us. The economic trials our country has faced since the onset of the pandemic certainly are no secret. But there’s so much more. As the economy continues to struggle, there’s also an acute social and political rancor dividing this country many claim they’ve never seen before.
Part of being a savvy retirement saver is looking outside of one’s immediate surroundings to see what’s going on in the rest of the world. It’s tempting for people to conclude that if things are just fine for them, they’re fine for everyone. But a brief look at even the most random data and information paints a picture of a nation now in genuine crisis.
Also revealing is the posture of legendary money manager Bridgewater Associates on both socioeconomic upheaval and gold. Those retirement savers wondering if they’re overreacting by looking to add safe-haven protection in the current environment might be interested to learn for how long social upheaval and gold have been priorities for the world’s largest hedge fund. Is there something in their worldview for you to emulate?
Also Read: How to Invest in a Bear Market
Food Lines, Mass Evictions and Riots Now Part of the American Landscape
A recent article at the U.S. News & World Report website suggests the turmoil characterizing the country right now is so significant that “America is unrecognizable to its allies.”
“Seen for more than 70 years as the politically stable leader of the democratic West, America and its deep social and economic cleavages are being laid bare before the rest of the world,” U.S. News writer Kevin Drew says in the piece. To his point, much of the news right now is suggestive of profound national economic and social instability:
- The economic recovery from the pandemic already appears to be in big trouble. The Labor Department reported last Friday that non farm payrolls increased by 661,000 in September. That would be a solid figure under normal conditions. However, after a four-month period that saw the nation regain 11 million jobs lost at the onset of the pandemic, September’s gain is seen as both disappointing and deeply troubling. “This report is an illusion of progress at a time when we needed accelerating gains in the labor market,” said Nick Bunker, economic research director at job placement site Indeed. “This report is massively concerning. We are not where we need to be, nor are we moving fast enough in the right direction as we head into fall.”
- According to a new report from Pew Research Center, 56 million Americans – roughly 17% of the country – have had to rely on a food bank during the pandemic. “Once only associated with enemy nations or with the Great Depression, bread lines have returned to the United States,” writes Alan Macleod of Mint Press News in his article on the Pew survey results. On a related note, a recent USA Today article claims “America is suffering its worst hunger crisis in decades.” According to the piece, 14 million of the nation’s children are missing meals regularly. That figure is three times higher than what it was during the financial crisis.
- In its latest Economic Impact Report, Yelp reveals that not only are business closures in the U.S. increasing, but 60% of all closures will be permanent.
- A recent CNBC article says millions of Americans may be unable to pay their rent in October. The article also cites a study by global advisory firm Stout Risius Ross that suggests 34 million Americans are at risk of eviction. According to eviction expert Emily Benfer, “The United States is facing the most severe housing crisis in history.”
- The National Guard has designated military police units in Alabama and Arizona to act in the capacity of “rapid reaction forces” that can immediately deploy anywhere in the country to assist other agencies in quelling civil unrest. Although there has been no official statement indicating this is being done in anticipation of election-related violence, an Associated Press article suggests the move is being made to prepare for just such an eventuality.
Food lines, mass evictions, shuttered businesses and anticipated election-day violence. Is this the United States of America…or a highly distressed, underdeveloped nation?
World’s Largest Hedge Fund Says Gold Is the Answer to “So Much Boiling Conflict”
The world’s largest hedge fund, Bridgewater Associates, has long been sounding the alarm on the potential consequences of significant economic turmoil as well as widespread social unrest. Not so coincidentally, Bridgewater also has a long history of advocating for the inclusion of gold in portfolios, a position that makes the hedge fund a bit of an anomaly in the world of high-profile money managers.
Back in January, Bridgewater’s co-chief investment officer Greg Jensen recommended gold on the basis that “there is so much boiling conflict” in the world. At the time, Jensen said prophetically, “People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.”
But Bridgewater concerns about both economic and social volatility go back many years. In 2012, Bridgewater founder Ray Dalio expressed his concerns about the possibility of significant unrest on both fronts, saying, “When people get at each other’s throat, the rich and the poor and the left and the right and so on, and you have a basic breakdown, that becomes very threatening.” Again, more than a little prophetic, given the current state of our union.
Around the same time Dalio was discussing the risks of great economic and sociopolitical turmoil eight years ago, he also was expressing the idea that everyone should own gold. Dalio told CNBC at the time that gold “should be a part of everybody’s portfolio to some degree, because it diversifies the portfolio.”
For those wondering if they’re being a little paranoid by looking to add safe-haven protection to their asset base, Bridgewater’s longstanding commitment to gold in the face of economic and social upheaval certainly is reassuring. But you don’t have to be the world’s largest hedge fund to appreciate the volatility besetting the national landscape and prepare your portfolio to withstand it with the proven safe-haven properties of gold. You need only be an earnest retirement saver devoted to doing the best you can for the benefit of your long-term financial security.