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Here’s some cheery news: According to a Rasmussen Reports poll, 34% of likely U.S. voters believe the country will experience a second civil war in the next five years.
It’s a stunning figure, to be sure. The poll was conducted just recently as nationwide civil unrest has been unfolding. Given the fierceness of recent events and the resulting polarized discussion, it’s unsurprising so many Americans see civil war as an eventual consequence of the riots they’re watching play out in real time.
But I think there’s more to this sense of impending social and civil doom than meets the eye. Yes, there is overt, violent turmoil in American cities right now. A lot of people are worried about where it will lead. But I believe the numbers also reflect a simmering personal economic frustration on the part of many citizens.
Until recently, monthly “window-dressing” unemployment numbers have suggested all is well. But we’ve known for some time that many U.S. households have been struggling financially in spite of those numbers. A number of economists said well before the pandemic hit that we were already on the road to recession. And now, of course there is the pandemic.
The current social climate clearly is very concerning. However, I believe it exists in part as a function of the nation’s gloomy economic outlook. When it comes to management of retirement savings, I encourage readers to look past provocative headlines and focus on underlying factors that could be helping generate the headlines. Those factors may include economic conditions and consequences that stand as genuine threats to personal safety and security.
Economic Threats to National Stability: Civil Unrest, Pandemic, Unemployment, Housing and More
When I saw the Rasmussen poll, I was reminded of another survey result I read about recently. In May, the University of Chicago’s National Opinion Research Center (NORC) conducted a poll that revealed something rather stunning: Americans are the unhappiest they’ve been in the last 50 years. The survey was conducted before George Floyd died in police custody and the subsequent blowup of civil unrest. That means the pandemic was the only widespread national crisis in play when Americans declared their abject unhappiness through the NORC poll.
The pandemic is a national health crisis of the first order. It also has proven to be an epic financial crisis. During this period, the unemployment rate rose to its highest levels since the Great Depression. Also, one-quarter of America’s small businesses – which employ nearly half of all American workers – are at risk of permanent closure.
I mentioned earlier that we’ve known for some time Americans have been fighting to stay afloat. A couple of years ago, research by the United Way Alice Project revealed nearly 43% of American households couldn’t afford basic living expenses. In light of the economic damage caused by the pandemic, what do we think that figure is now?
We don’t have an exact update of the United Way number, but here are some of the latest figures indicating similar circumstances: 31% of Americans missed their housing payments in May, and 30% missed those payments in June. And millions of Americans are poised to fall off an “income cliff” when the $600-per-week added unemployment benefit ends July 31.
The economic dynamics of social unrest are well-documented. Several developed nations – including the U.S. – have been fighting off recession for years. With those nations now engulfed by a pandemic that has no end in sight, an uptick in social unrest AND economic damage might be expected.
Gold Value Poised to Benefit from Civil Unrest & Economic Upheaval
As a retirement saver, how do you deal with the growing social and economic uncertainty in America? Can you do anything to help secure your savings as the chances of a persistently chaotic America seem to increase?
Unfortunately, divisive unrest may be our reality for the foreseeable future. So it’s really important to make the best decisions we can under the circumstances for ourselves and our families. That includes decisions affecting our future financial security. One good decision to consider is the addition of a safe-haven asset such as gold to our portfolios.
Greg Jensen is chief investment officer of Bridgewater Associates, the world’s largest hedge fund. He predicted in January that “boiling conflict” would help drive gold value to a new high of 2,000 dollars per ounce. We are obviously seeing “boiling conflict” right now.
But Jensen cited this kind of conflict as just one of the factors capable of driving gold up into unchartered territory. He also pointed to a highly accommodative Federal Reserve as a gold-positive influence throughout the near term. Recently, both Goldman Sachs and HSBC confirmed they’re expecting big things from gold shortly. Both investment banks cited the usual-suspect reasons for the higher gold values some expect: more fiscal and monetary stimulus, which leads to lower yields and greater inflation fears. Goldman Sachs’ now has joined Jensen in his 12-month gold price target of 2,000 dollars.
And it’s on its way. Gold value has risen 17% since the beginning of 2020 and gold prices are up 32% in the last 12 months. I would suggest to you that there is a “total energy” fueling gold value right now. This total energy includes recessionary conditions, market volatility and economic pessimism. It’s also made up of the anticipated effects of massive fiscal and monetary policy responses designed to combat these forces. And, yes, social discord and civil unrest is part of that energy, as well. The social and civil factors exist both apart from the gloomy economic conditions and as a function of them. As Bridgewater’s Greg Jensen highlights in his comments, all of this can act to push gold values higher as more people look for safe havens.
Are we really headed toward a civil war? If the Rasmussen Reports numbers can be believed, a healthy portion of our fellow Americans really do think so. Personally, I’m less convinced. What IS clear is that the drivers of widespread economic and social upheaval – often one and the same – remain key threats to the stability of your retirement savings if you have everything in traditional assets.