I don’t know if it’s my own little online bubble, but every time I open my phone at the moment I am being swamped with bearishness and negativity.
Never mind all the political and social stuff, it’s financial as well. The problem I have is that a lot of the bearish arguments are well reasoned.
In a nutshell: too much concentration in the S&P 500, which under the surface is looking very mucky, bond yields too high and too much government spending.
Given that governments everywhere are running such unsustainable deficits, the chances of a sovereign debt crisis are very real. The cost of their debt, aka bond yields, is rising across the western world, and higher yields will suck liquidity out of every market, be it real estate, precious metals or equities. There is risk everywhere you look.
It’s easy to say the words sovereign debt crisis. It’s also easy to say that we actually need one: we need governments to default and reset because, unless they do, we will just continue as we are, sinking further and further into socialism and atrophy.
But an actual crisis, followed by a default and a reset, is, to put it mildly, not a pleasant experience. It is not an easy thing to get through, and the rollercoaster ride that asset prices will go through can be seriously damaging to your wealth.
If you live in a third world country such as the UK, I urge you to own gold or silver. The pound will be further devalued, as will the euro and dollar. The bullion dealer I use and recommend is The Pure Gold Company. They deliver to the UK, the US, Canada and Europe. More here.
There is a problem with owning anything. Let’s go through it.
And we’ll start with real estate. Rising yields push up mortgage rates, which lessens affordability. That means prices have to fall to reflect that. Maybe not straight away, but I think yields have to go higher, even with financial repression. In the UK, shoved along by higher taxes, it’s already happening: people are finding it very hard to sell property.
