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Is a New Financial Crisis Headed Our Way?

Is a New Financial Crisis Headed Our Way?

We have just witnessed the worst start to a new year for the stock market in history. Yes, you read that right: The stock market has never had a worse opening two weeks of the year than what we just saw. This has many people wondering if we are headed into another financial crisis — not even a decade after the financial crisis of 2008-2009 wiped out an estimated $10 trillion to $12 trillion in stock market value worldwide.

Prepare Now to Avoid Big-Time Losses

The last financial crisis was caused by the bursting of the overinflated housing bubble in 2008. The next one, according to a recent editorial published on CNBC.com, will likely be caused by the bursting of another bubble: energy and commodities. As we’ve seen recently, the plummeting price of oil has ripple effects throughout the entire world economy.

While plunging oil and gasoline prices get most of the headlines, the prices of copper, iron ore, cotton and other commodities are also in a free-fall. The Bloomberg Commodity Index — which represents 20 different commodities including aluminum, zinc, soybeans and sugar — has dropped from 175 in April of 2012 to 73 on January 15, 2016.

China is Dragging Down the Rest of the World

The other major factor in the market meltdown is the sharp deceleration in growth in China, the world’s most populous nation and second largest economy. China’s GDP sizzled at or near double-digit growth over most of the past quarter-century, but it started to slow down considerably a few years ago — finally dropping below 7% at the end of last year for the first time since 2009.

Slowing growth in China is a big factor in the plunging price of oil, because that nation accounts for so much of oil’s demand. But China isn’t the only nation with big economic problems: Russia, Brazil and Venezuela are all in serious economic trouble as well. Russia’s economy contracted by 3.7% last year, its worst economic performance since 2009, while Brazil’s GDP also shrank by 3.7% and its economy fell from the world’s fifth largest to just the ninth largest. Venezuela, meanwhile, has been dubbed the world’s worst-performing economy by the International Monetary Fund.

While many in the U.S. would like to think that what happens in other nations has little or no impact here, that’s extremely wishful thinking. Today’s world economy is more interconnected than ever before. In fact, economic weaknesses all around the globe led the IMF in January to slash its forecasts for global growth this year and next year to just over 3%.

So Where Should You Turn?

With the global economy in shambles and stock markets worldwide in a freefall, where can you invest your savings and retirement funds without having to worry about them vanishing before your eyes? The answer: Consider investing your hard-earned money in gold and silver. These precious metals reside outside of the global banking and financial systems, so they are less likely to be impacted by the economic turmoil that’s engulfing the world.

In a worst case scenario, precious metals generally hold their value—and they can never be worth zero! Gold, for example, tends to move inversely to the dollar, because the more the government prints money, the less the dollar is worth. By contrast, there is a finite supply of gold, which means it has intrinsic value that could insulate you from global currency debasement. In fact, during the years immediately following the financial crisis of 2008, the price of gold more than doubled. The price of silver increased nearly five-fold.

It was less than eight years ago that the financial crisis and resulting stock market swoon destroyed the portfolios and savings accounts of millions of Americans, forcing them to drastically change their lifestyles and plans for the future. Instead of going through this all over again, learn the lessons from recent history and don’t doom yourself to repeat them.

Instead, take control of your investments and consider adding the stabilizing factor of precious metals. Think about converting part of your investments to gold and silver now — before it’s too late to save your future.

http://blogs.wsj.com/economics/2012/10/01/total-global-losses-from-financial-crisis-15-trillion/

http://www.cnbc.com/2015/12/08/the-real-danger-of-the-oil-collapse.html

http://www.bloomberg.com/quote/BCOM:IND

http://www.marketwatch.com/story/dow-set-for-triple-digit-drop-as-oil-breaks-under-30-2016-01-15

http://www.bloombergview.com/articles/2015-10-05/oil-and-other-commodity-prices-haven-t-yet-hit-bottom

http://www.tradingeconomics.com/china/gdp-growth-annual

http://www.bbc.com/news/business-35398423

http://observer.com/2016/01/struggling-brazil-has-less-to-dance-about/

http://www.ft.com/fastft/2015/10/06/venezuela-contract-10-this-year-worst-world-imf/

http://www.imf.org/external/pubs/ft/weo/2016/update/01/

http://www.nasdaq.com/markets/gold.aspx?timeframe=8y

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