I’m the sort of person who prefers to act rather than react—especially when it comes to protecting myself and my family against an uncertain future. Take your car, for example. Would you rather have a good insurance policy before or after you get into an accident?
The same goes for my financial portfolio. Even when times are good, I’m always trying to think five, ten, or even twenty years down the road. If there’s any chance of another recession or economic turbulence in the future, I want to make sure my portfolio is ready to weather that storm. This is why I find it interesting to hear that some Americans prefer to take a “wait and see” approach with their hard-earned savings. Because once you “see” another car blowing past a stop sign, it may already be too late to get out of the way.
We’re still seeing signs of economic uncertainty—and the dollar continues to decline.
On June 15, 2023, Yahoo Finance wrote that the U.S. dollar “saw an 8% decline in its share of global reserves in 2022—causing some to question whether the dollar’s days of dominance are over.” The news organization is referring to de-dollarization, the process by which nations’ central banks are replacing portions of their U.S. currency reserves with other assets. Notably, gold saw record demand from central banks in 2022 according to the World Gold Council (WGC), and central banks set a new record in Q1 2023 by adding 228.4 metric tons of gold to their reserves.
Meanwhile, NBC reported on June 14, 2023, that prices remain high for consumers despite inflation slowing down. Indeed, on June 16, 2023, Goldman Sachs Group Inc. strategists released a note saying they believe markets are “too optimistic” when it comes to how quickly inflation will drop.
If nations continue to move away from the dollar and additional market uncertainty is on the horizon, is now the right time to “wait and see”?
As we’ve mentioned before, a market rally doesn’t mean we’re “out of the woods.”
Back in April, Brad Chastain, our Director of Education here at U.S. Money Reserve, wrote a piece discussing the lessons we learned from the 2008 Financial Crisis and the importance of remaining vigilant. This past week, I asked him for an update and what his thoughts are on the “wait and see” approach to managing a portfolio. Here’s what Brad told me:
“The key point of that [April] piece is that it took 1.5 years for the [2007–2010] subprime mortgage issue to play out, with many market rallies and ‘we’re out of the woods’ moments before the crash. Right now, banks are still tightening lending standards, which they’ve been doing since before the March  banking crisis. This is a lesson they learned from the Bear Stearns collapse in 2008. But while this will help protect individual banks, it isn’t indicative of an economy running on all cylinders. Tight bank lending also makes the economy less resilient to weathering other potential economic disruptions that may occur.”
Brad went on to mention the current state of the commercial real estate market, which Forbes said in May 2023 may be headed for a possible crash. A crash in this sector, he told me, could serve as a potential catalyst for another “economic disruption.”
It’s never too late to protect your assets with gold.
Whether you keep gold in a private safe or hold it in an IRA as part of your retirement portfolio, physical gold can act as a form of wealth insurance, helping you protect the savings you can’t afford to lose.
In the last 10 years alone, from January 2013 to June 2023, the dollar has lost more than 32% of its purchasing power according to the U.S. Bureau of Labor Statistics’ CPI Inflation Calculator. Meanwhile, gold has increased by more than 42% in that time, helping preserve the purchasing power of those who have taken up even a small position in physical gold.
Adding gold to your portfolio is a way to provide your savings with extra levels of both growth potential and wealth protection—and as with other forms of insurance, that protection works best when it’s in place before you need it. That’s why, to me, a “wait and see” approach can’t compete with taking action and diversifying your portfolio now before the next economic downturn hits.