How to Protect Yourself from a Debt Crisis
Is a new debt crisis on the horizon? Ten years ago, a financial crisis rocked the global economy in 2008, threatening developing countries in Europe with bankruptcy and sending the U.S. on the brink of a depression. Now, investors are keen to know when the next big one will hit. Many believe that the global economy has repeated some of the same mistakes it did before in 2008, including sub-prime loans in the U.S. (now for car loans rather than mortgages) and millions of consumers in the west who won’t be able to afford their mortgages when interest rates finally rise.
No one really agrees on what will trigger the next debt crisis. Some expect the cause to be deregulation from the Trump administration and existing flaws in the Dodd-Frank Act, or massive government debt levels, and even the lack of ability of consumers to keep up with payments after they’ve been coddled by a decade of low-interest rates. One way or another, a correction is coming.
As an investor, you can protect your assets from a debt crisis by pivoting into the precious metals market. Gold and silver bullion are “safe haven assets” that are better at weathering financial storms than any financial product, including cash. When investors want low-risk gold and silver, they turn to low-cost gold and silver companies like Silver Gold Bull Canada to handle investment-grade gold and silver coins and bars.
How to Invest in Silver and Gold
The media will tell you that there are many different ways to invest in silver and gold. You can buy silver and gold ETFs, silver and gold futures, or mining company stocks. But as gold company Silver Gold Bull Canada will tell you, there’s really only one way to invest in gold and silver. That’s with bullion. Silver coins, silver bars, gold coins, and gold bars (as well as rounds and collectibles) are the most reliable way to put your money into safe assets. That’s because a real debt crisis could instantly wipe out paper silver and gold.
Understanding Silver Markets
In the event of another extreme debt crisis, equal to or worse than what the world saw in 2008, the precious metals market could explode overnight. A debt crisis would almost certainly mean currency devaluation. It’s exactly what happened in 2008, after which governments became reckless printing money in order to bail out banks that were trillions of dollars in debt. That kind of currency printing can cause inflation to speed up, and that’s what sends investors running for inflation-proof assets like gold and silver. It could even convince paper silver investors to expect delivery on real silver, and that would be a major problem for anyone stuck holding paper.
The paper silver market has become extreme. Paper silver refers to silver contracts for future delivery (i.e. silver futures). However, the exchanges are trading far more silver than actual silver production could ever satisfy. Just in 2016, it was estimated that markets traded 180 times more paper silver than global silver mined. It’s no secret and right now it’s not a problem, because traders don’t expect delivery. As delivery approaches, they sell and change their positions. The day that changes, there will be a run on silver bullion that will break the market. Unless you’re already holding silver coins and silver bars, you likely never will. If you’re holding paper silver, it may turn out to be worthless when you’re sold short and all you can recoup is cash in the midst of runaway inflation.
Gold Prices in a Crisis
A similar situation exists in the gold market, but experts believe the leverage on silver is far more extreme. Silver is also where investors will go first when they’ve been locked out of gold. Crises tend to trigger gold bull markets as investors move into low-risk positions away from the stock market. Where gold goes, silver tends to follow, often rising and falling more dramatically than its more stable counterpart.
Who Buys Silver?
Besides private investors, who buys silver bullion? Governments and central banks may diversify their gold holdings by buying silver. Government stocks are also largely responsible for making up the difference between silver supply and demand, by selling off their silver reserves to industry or to central banks for minting silver coins and silver bars. Banks like JP Morgan are buying silver bullion, too; they have now accumulated 55 million ounces of silver.
When banks start buying silver, it’s because they’re worried about a debt crisis or high inflation. Banks are just as invested as private investors in protecting their assets in a time of crisis.
Buy Silver Coins Now
If you’re worried about a financial crisis, head over to a company like Silver Gold Bull Canada that sells silver coins, gold coins, and other precious metals at low prices online. The next financial crisis will be devastating and it could have major implications for the paper metals markets. Don’t get caught holding a useless piece of paper. Buy real precious metals that you own and store in your own vault.
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