The good news is that financial markets are maintaining their resilience in the face of recent economic stresses. The bad news is that fears of a recession – or worse – continue to grow. Even notable business experts, such as Microsoft’s Bill Gates, believe we’re in store for another financial crisis similar to the one that nearly toppled the global financial system in 2008.
There is certainly a lot of economic- and geopolitical-based information and data suggesting big trouble is on the way. But what if the next financial crisis is triggered not by a sudden change in the interest climate or a realization that the trade war is here to stay but by something even more nefarious? That’s exactly what some are saying could happen.
Concern is mounting in this era of financial transactions on digital platforms that it could actually be a cyberattack, of all things, that brings down the global financial system. This serious threat is just one more reason forward-thinking retirement savers must keep their heads on a swivel now to account for all the ways their savings could be attacked. Fortunately, select alternative assets, such as physical gold and silver, not only mitigate economic and geopolitical risks but also go a long way to alleviating risks associated with a financial system that retains money and sensitive information digitally.
“Next great crisis could easily originate in cybersecurity.”
A recent Augusta blog article shed light on two of the more profound risks to citizens living in a cashless society. The genesis of the piece was news that several nations – including China, Canada and Sweden – are actively seeking to establish digitized versions of their national currencies.
The first of the two risks we reported is that digital national currencies potentially would enable governments to track all of account holder transactions, thereby raising the awful specter of a “Big Brother” threat to privacy and liberty.
Second, because digital national currencies essentially would force people to keep all money in electronic form at financial institutions, they would have no way to avoid the effects of drastic monetary policies such as negative interest rates – because removal of cash from the banking system would no longer be an option.
These risks are bad enough. But a financial system fully dependent on digital transactions and operations has another inherent risk: cyberattacks.
Finextra is considered by many to be the world’s leading resource for financial technology news and information. In a recent article, Finextra cited experts who say key elements of the massive systems used to operate the global financial industry are ripe for exploitation by cybercriminals, terrorists and even rogue nation-states. The world’s financial infrastructure now relies completely on these systems and platforms, and this raises the possibility that a successful breach on a grand enough scale could bring the global economy to its knees. Finextra summarizes the core concern this way:
The 2007-08 crisis emanated from severe loss of liquidity in financial markets. With the global financial system reliant on payment companies and other intermediaries facilitating frictionless movement of money from one place to another, one can imagine the damage that could be caused by a major disruption to this.
Ed Williams, EMEA (Europe, Middle East and Africa) director of cybersecurity firm Trustwave SpiderLabs, emphasizes the acute threat to the financial system that now exists as a result of global connectivity: “We live in a connected world. Something could happen in one part of the world that has huge ramifications on what goes on elsewhere, so the next great crisis could easily originate in cybersecurity.”
The Finextra article points out that the realm of finance is “one of the best performing sectors with relation to cybersecurity.” This is due in no small way to the industry’s natural imperative to protect customer data and information. Unfortunately, a key vulnerability in cybersecurity has to do with the dated equipment still being used by many operators in the industry.
“A lot of money goes through legacy kit [old systems],” says Williams. “Mainframes or network architecture that have been around for a long time still exist within large financial enterprises, and we’re seeing tools and practices that are successful in breaching these.”
Physical Gold and Silver Keep Lights on in a Financial System “Blackout”
In addition to their important role in protecting savings from economic and geopolitical threats, precious metals provide greatly enhanced physical asset security. It’s a reality that practically all forms of money today are now effectively digital assets. The cash in your wallet may be tangible and safe from hackers, but as soon as you deposit it in the bank it turns into an electronic asset. It instantly becomes vulnerable to hacking and other forms of electronic manipulation.
However, legitimate worries about financial system vulnerabilities extend far beyond personal savings security. Concern is now growing that penetration of this complex system by the wrong elements could result in a disruption so vast that a worldwide financial crisis ensues.
That’s bad news, of course, but here’s the good news: Physical precious metals demonstrate a capacity to strengthen in both economic and geopolitical crises. This likely will serve metals owners particularly well when hacking or other cyber-disasters plague the global financial system. Moreover, when your personal digitally-stored assets are compromised by such an event, the gold and silver you own in a non-bank depository would remain safe from the breach.
It’s difficult to think of another asset that offers the wide range of financial protections as physical precious metals. Do you own gold or silver? If the answer is “No” but you think you’re finally ready to learn how to add metals to your mix of assets, call Augusta Precious Metals at 800-700-1008 to speak with one of our knowledgeable gold and silver professionals. Augusta offers a full range of precious metals products and services to suit your retirement savings needs, including metals eligible for a silver and gold IRA. When you call, ask the team member you speak with to explain just how easy it is to open an IRA made of premium gold and silver. We look forward to hearing from you.