Thanks to you, our valued clients, for participating so enthusiastically in our nationwide 2018 Market Confidence Poll.
Like you, we were quite curious to find out what fellow gold owners think today about our collective financial future. However, we were also a little concerned about what we thought we might hear from them.
Our respondents turned out to represent a wide range of ages, geographic locations and affluence. However, this isn’t a poll of all Americans. The Poll gives an unparalleled insight specifically into the mindset of the typical gold owner right now, at time when stock markets are at all time highs, political rancor is at a breaking point and we are seeing nuclear saber rattling by a crazed dictator overseas.
The top findings are not for the faint of heart. Our Confidence Poll indicates that Hartford Gold clients are deeply concerned for the future of our currency, our markets, our security and our nation. In fact, you might want to sit down before scanning these stats:
65% think the stock market will suffer a severe correction within the next year
30% think stocks will crash within the next three months
68% think chances of war with North Korea in 2018 are a “moderate threat” or more
58% think it isn’t possible to protect their digital lives from cyberattack
62% think the U.S. dollar will be weaker by the end of 2018
53% think the Chinese yuan will be the premier world reserve currency in 10 years
74% think gold is the best alternative investment right now
Before we reveal the rest of the results, let me explain why we felt it necessary to find this information out right now.
A survey from the American Psychological Association just revealed that an astounding 59% of Americans consider today the lowest point in U.S. history. Why is there such a sense of gloom and doom amongst so many Americans? I think most of us are aware of the growing political grandstanding, the stagnation of U.S. wages and the dangers of a clearly overpriced stock market.
Gold owners tend to be more security-minded than the average person and exceptionally sensitive to changes in the environment that can add more risk to their retirements. So your views are, in my opinion, perhaps a bit more informed than the average person.
Confidence Poll: What you had to say
1) When do you think the next severe stock market correction will strike in the United States?
A majority of respondents believe that a stock market correction will take place in the next year, with 30% thinking it could come before March 2018. October 2017 marked the 30th anniversary of Wall Street’s Crash of 1987, where the Dow Jones Industrials Average fell roughly 22% in a single day – a 4,900 point drop if it took place now.
John Hussman of the Hussman Funds advances the argument that what investors presently take as a comfortable environment of pleasant market returns and mild volatility is actually, quietly, the single most overvalued point in the history of the U.S. stock market.
2) In light of current economic conditions and recent stock market highs, what is the “safest” of the following alternative investments – gold and silver, real estate, U.S. Treasury bonds and bills, bitcoin or diamonds?
A significant majority of our client respondents think gold and silver are the best alternative investments right now. The bond market is trading at lofty levels. Many countries’ benchmark interest rates are close to zero or even negative and the federal-funds rate has not been above 6% since 2008 and at 10% since 1989.
The proposed tax cut in Congress is expected to add trillions to the federal deficit and personal-, corporate- and government-debt levels are at nosebleed levels. Any economic contraction will pressure real estate. Bitcoin has no safety net like other traditional financial products and if your Bitcoins are lost or stolen, there is no intermediary to rescue you. Another ticking time bomb in the U.S. economy is unfunded pension liability. Pensions are grossly underfunded, and if there is a stock market correction, the coming pension crisis could cause another Great Recession.
In addition, U.S. student-loan and credit card delinquencies are rising. What happens when the next recession causes a wave of additional delinquencies? These are just a few of the reasons retirement investors have been gravitating to gold and silver coins.
3) How big a threat is North Korea to the United States? Are we likely to go to war next year?
Many of our clients fear the provocations of North Korea and think eventual conflict between the two countries is likely. The crisis in North Korea has not caused the markets to panic…yet. Proving that the financial markets don’t care until they do. A cataclysmic war with North Korea could cause a flight to safety to safe haven assets like precious metals.
4) The U.S. dollar is the premier world reserve currency today, meaning it is trusted by more central banks than any other currency. Which currency do you believe will be the premier world reserve currency in 10 years? Do you think the dollar will be stronger or weaker right now?
Sadly all the signs point the wrong way on this one. A majority of our clients think the Chinese yuan will become a more desirable world currency than the dollar in a decade. China – the world’s No. 2 economy – is a fast growing economic and military powerhouse. China is also an aggressive buyer of physical gold and even now rivals India as a key source of global demand for gold. Chinese investors appreciate the security of gold, especially as tales of fraud and abuse continue to plague the Chinese economy.
5) Do your believe your private information and financial assets are safely protected from hackers and cybercrime?
Cybercrime is very much a major concern for many of our clients and a majority think they are vulnerable to digital predators. One of the key advantages to owning physical precious metals is you can not be hacked or see your gold portfolio evaporate in the event of a major geopolitical crisis. When you own physical gold or silver, you are gaining the ultimate protection from electronic theft.
SOCIETE GENERALE: STOCK INVESTORS ARE “DANCING ON THE RIM OF A VOLCANO”
The S&P has risen more than 15% in 2017, buoyed by robust corporate earnings, the possibility of tax reform and an improving global economy. Stock price valuations have also been propelled by fears by investors who think they are missing out on the bull run as well as continuous inflows into stocks from passive investment strategies.
Societe Generale strategists have issued a grim warning to investors that a potential stock market downturn is likely because participants are too optimistic. The investment bank believes stock investors are now “dancing on the rim of a volcano.”
The respected bank argues that the S&P500 could fall over 20% by the end of 2019.
Societe Generale’s head of global asset allocation Alain Bokobza believes that a goldilocks scenario of low interest rates, abundant liquidity, stable growth and a focus on ‘good’ Trump has caused investors to push asset prices, volatility and leverage to historical extremes. Bokobza compares U.S. stocks to “the boiling frog that doesn’t realize the trouble surrounding it.”
Wharton School finance professor Jeremy Siegel thinks that the stock market is near the top and 2018 will bring a “pause” in equities. As I highlighted in a recent blog, Warren Buffett’s favorite stock market indicator – the total market capitalization of all U.S. stocks relative to the country’s gross domestic product – is just about to break the record of 145% just before the 2000 dotcom bubble burst and a subsequent major stock market reversal.
FRANK HOLMES THINKS SILVER IS UNDERVALUED
U.S. Global Investors chief executive and chief investment officer Frank Holmes thinks silver is undervalued.
Holmes thinks the silver market stands to benefit from the strong readings on the economic health of the global manufacturing sector point to increased consumption of industrial metals.
CONSIDER GOLD AND RECOVER YOUR CONFIDENCE
I understand that this column doesn’t always read like the funny papers, and this one is no exception.
Compared to the rosy picture you read in the news everyday about our ridiculously over-valued stock and housing markets, the news you receive here might seem too pessimistic sometimes.
This is specifically why we wanted to go straight to gold owners for their opinion this time, rather than the “average American.” Remember, these average citizens are the same ones that are blindly bidding up the markets day after day with no discernable reason or sense of risk. I’m far more interested in what could go wrong, so I can be prepared, than just blindly hoping that things will keep going right.
Our Confidence Poll indicates that our clients are quite concerned for the future of America, and rightfully so. But you have taken control of your financial future by investing in physical gold and silver and are hopefully better positioned to withstand the next stock market correction.