Sometimes we can feel lost when faced with uncertainty. How can we know whether a decision we’re about to make will benefit us if we don’t know what the future holds? But with the right frame of mind, uncertainty itself can help provide clarity for our decision making.
For example—right now, we’re continuing to see a wide variety of predictions regarding the U.S. economy. Will the Federal Reserve manage to tame high inflation without precipitating a recession, or is our economy once again headed for harder times? Not having the answers to these questions may seem frustrating, keeping us from properly preparing our portfolios for maximum gains or protection depending on our preferred level of risk exposure. But that uncertainty may be the clue that leads us to a more secure portfolio.
While some reports suggest a strong U.S. economy, others show a lack of consumer confidence.
On September 5, 2023, MSNBC published an article titled “Latest numbers on job growth show a resilient U.S. economy.” But inflation may tell a different tale: On August 31, 2023, Fox Business reported that a key Federal Reserve inflation gauge “ticked higher in July as steep prices continue to squeeze millions of U.S. households.”
Inflation also seems to continue to be at the forefront of many Americans’ concerns. On August 29, 2023, CNN reported that “U.S. consumers’ mood soured at the end of summer on inflation worries,” based on a drop in the Conference Board’s Consumer Confidence Index, which “gauges Americans’ attitudes toward the economy and job market” according to CNN. The article went on to state, “Consumers’ expectations of economic conditions in the coming months declined sharply.”
We won’t know whether these pessimistic views are justified for several months—but just knowing that consumers continue to be concerned could have economic impact because those worried about their savings may begin to cut back on spending, slowing down economic growth. This provides us with yet another clue as to which moves may benefit our portfolios in the long term.
Concerns persist about our nation’s short-term economic future.
Even if the United States manages to avoid a recession in the coming months, other factors may affect economic growth and consumer portfolios.
On September 2, 2023, Fox Business published an article discussing the appearance of O’Leary Ventures chairman and Shark Tank star Kevin O’Leary on a recent episode of Fox & Friends where he discussed current risks to small businesses—specifically, the ability to access funding through regional banks. “The cost of capital has gone through the roof,” O’Leary said. “We have a crisis emerging…. You’re going to hear a lot of people crying about this in the next few months.”
The following day, on September 3, 2023, The Washington Post published an article describing how the federal deficit is projected to “roughly double” in 2023 despite a growing economy. “A strong economy usually reduces the deficit,” the article states. “Not this time.”
In times of economic uncertainty, one asset consumers trust is physical gold.
When I see myself surrounded by economic uncertainty, I like to take a step back and examine my financial position. Have I done what I can to help protect myself and my loved ones? If I can’t know what’s waiting on the horizon, what decisions or actions can I take now using the information I have? I like knowing that I’ve made the best possible decisions for my portfolio with the information I have available—which brings me to physical gold.
Even though gold has seen impressive growth over the long term, perhaps its most popular benefit is as a store of wealth during times of uncertainty and volatility. Gold has a recognized history of holding or even growing its purchasing power over time—something that can’t be said for cash, which is constantly losing its purchasing power through inflation.
Physical gold helps us protect the savings we can’t afford to lose. Which is why, when faced with uncertainty, I like to reexamine my portfolio and consider increasing my allocation to gold and other precious metals.
