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Economic Depression: “D-Word” Just Won’t Go Away

Posted By Isaac Nuriani |

We continue to travel ever further down the coronavirus road. As we do, we’re hearing the idea of “depression” invoked more frequently to describe the possible economic outcome of the pandemic. Serious mentions of the “D-word” by respected financial professionals have been rare until recently. But we’re certainly hearing it now. Experts are on edge about an unemployment rate already near 15% and projected to reach 25% by summer. Here’s their bigger worry: Double-digit unemployment could be with us for the foreseeable future because genuine virus containment remains out of reach.

Especially notable about this activation of the word “depression” is the people using it, as well as the places they’re saying it. Recently it was used by two big names – one legendary hedge fund manager and one renowned economist. In separate appearances on CNBC, both men suggested an actual 1930s-style economic depression could be in our future. For retirement savers, the prospect of this nightmare coming to life raises one question: Is there anything I can do to protect myself?

 

Hedge Fund Giant Paul Tudor Jones: “Second Depression” if Lockdown Lasts a Year

In some parts of the country, pandemic lockdowns are being extended. Los Angeles County announced stay-at-home orders will continue through July. California’s state university system already has decided to cancel fall classes. Washington, D.C.’s mayor announced that city’s stay-at-home order will be extended through June 8. As lockdown restrictions are being eased in many parts of the U.S., other states and municipalities are standing fast. And there are worries that total lockdowns nationwide will return if the feared “second wave” of a COVID-19 outbreak comes to pass.

Against this backdrop, hedge fund legend Paul Tudor Jones is concerned greatly about what he terms a “second depression.” Appearing on CNBC’s “Squawk Box,” Jones said, “If a year from now we’re still in the same situation, we will be in a second depression.”

He’s not impressed by the recent bounce in financial markets, either. Jones believes as weakness in the economy grows, the markets will be forced to see things as they really are. “There’ll be a shift in focus from liquidity issues somewhere down the line to solvency issues,” he says. “If we don’t find a vaccine or a cure, if we don’t find a much better way of testing at scale … then I think the market’s going to have a much more difficult time.”

 

Economist Mark Zandi: “It Will be a Depression” if Another Virus Wave Hits

Moody’s Analytics chief economist Mark Zandi is another expert who is unafraid to call it as he sees it when it comes to the economy’s gloomy prospects.

“If we get a second wave, it will be a depression,” Zandi declared recently on CNBC’s Trading Nation. “We may not shut down again, but certainly it will scare people and spook people and weigh on the economy.”

In other words, Zandi is saying the direst of possible outcomes could occur even without a total shutdown. A second wave of the virus will be enough to keep people from participating significantly in the economy. Zandi personally defines a depression as double-digit unemployment lasting at least one year. An economy rattled by a second profound virus outbreak would result in such an outcome, in his view.

Zandi thinks that nothing short of development of an effective COVID-19 vaccine in the near term will stave off a depression.

 

Economic Depression Outlook Is Frightening – but Gold Actually Could Benefit

All this talk of a depression, is, well, depressing. Is there anything a retirement saver can do to defend their savings against this most severe kind of downturn? Or is such an eventuality just so bad there’s nothing anyone can do to survive it economically?

I encourage savers in times such as this to tune out the noise in order to hear the music. In this case, that could mean understanding the beneficial effect that will accrue to gold if the government and central bank continue pull out all the stops to keep the country afloat.

Last week’s blog article discussed gold’s propensity to rise on the back of ballooning federal deficits and unrestrained Fed asset purchases. There are projections the 2020 federal deficit will hit a record 3.6 trillion dollars. And you can be sure, if a depression scenario grows likelier, subsequent years could see even much higher deficits.

As for the Federal Reserve, their balance sheet stands now at 6.7 trillion dollars. It’s predicted it will go above 10 trillion dollars by the end of 2020. If a depression ensues, surely we’ll find that “QE infinity” is not merely an expression.

For retirement savers willing to stand tall in the face of ultra-gloomy economic projections, there’s potentially some good news: The uglier the landscape grows for the economy, the more attractive gold could become.

 

Help Protect Your Retirement Savings with Gold from Augusta

Is your portfolio hedging against all this chaos with the demonstrated safe-haven power of gold?

If not, it’s a good time to call Augusta Precious Metals at 800-700-1008. You’ll tap into the expertise of our in-house economic analysts. These professionals devote their days (even sometimes nights) to evaluating the constant array of threats to your hard-earned savings. They do so with an eye to determining how gold and silver can help minimize – and even offset – those threats.

If your portfolio is worth 100,000 dollars or more, you have a great deal to lose in this scenario. The good news is that you are eligible to receive our free guide on retirement protection. You also can reserve a seat for Augusta’s live Profit & Protect Web Conference. This presentation is hosted by our senior economic analyst Devlyn Steele. Mr. Steele is a member of the prestigious Harvard Business School Analytics Program and a 36-year veteran of economic analysis. He’ll show you the inner workings of a financial system that benefits elites at the expense of “regular” retirement savers. He’ll also demonstrate how you can still prevail in this system when you put the power of precious metals to work for you.

Economic “depression” is an ugly word and we’re hearing a lot more of it these days. The government is ready to fight it by going into record debt. And the Federal Reserve plans to do its part by quantitatively easing forever. It’s unclear how much those efforts will help the economy, but there’s good reason to believe they’ll send gold soaring. Contact Augusta to learn more.

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