New Administration’s Impact on Investments
2021 government policies and multiple executive orders are impacting wealth in many ways, and the recent change in administration is perhaps one of the most significant transitions the United States has faced. This fact, combined with the aftermath of a worldwide pandemic, has placed the US economy in a vulnerable situation in which inflation is almost certainly around the corner. Let’s explore some of the current concerns about the new administration’s impact on business and family investments:
The Weakening Dollar
Since 2020, the dollar declined from its April high by a historical 15%. This recent decline is likened to previous black swan events—described by the Corporate Financial Institute as “a phrase commonly used in the world of finance … an extremely adverse event or occurrence that is impossibly difficult to predict. The weakening dollar is evident.
The Rising Debt
As the nation doles out even more in pandemic-related stimulus money, the country is nearing $30-trillion in national debt. This frightening figure includes a debt to GDP ratio near 130%, primarily due to the loss of jobs, closure of businesses, and reduced incomes based on the over-year-long Covid pandemic combined with new job losses.
The Loss of Jobs
With climate change now on the minds of many in charge, oil and gas are the targets. The recent XL Pipeline halt has already resulted in 11,000 job losses, not to mention the losses for local businesses and infrastructure. There is plenty of controversy about the potential for a $15 minimum wage—excellent for the workers but detrimental for small businesses. Not only that, new immigration policies are sure to impact the availability of US jobs.
The Government Stimulus
The government will ultimately try to calm down the public and insist that inflation will not happen—that the new stimulus (the largest in history) will strengthen the dollar and boost the economy. In reality, the latest stimulus package is primarily focused on state infrastructures such as transportation and climate change rather than small businesses and individuals that need help. It’s noted that two-year and ten-year Treasury notes went up recently as well. On February 13, 2021, Wolf Street reported, “10-Year Treasury Yield Hit 1.21%, More than Doubling Since Aug.”
Printing of Money / Inflation
In any case, the Feds will print more money to accommodate the nation, and more credit will be issued. The bottom line—inflation! The nation’s monetary policy, as described by Investopedia, is impacted. This means a rise in costs for many commodities: gold, silver, agriculture/food, oil, lumber, gas, copper, and steel, to name a few. With inflation or even hyperinflation on the horizon, every investment profile should be under comprehensive review. As more money is printed, rates go up, and we have a market wrought with fear of inflation.
Risk Impacts to Consider
The value of your assets is almost always expected to suffer at the hands of inflation. Consider these risk impacts to you, your family, and your financial portfolio:
- The price of goods and services rising
- Expect an increased cost of living
- Suppliers and wages cannot keep up
- Pensions, treasury notes, and savings may devalue
- Commodities and equities are at risk
- Bonds may incur higher short term interest rates
- Real estate values will drop if interest rates rise
- Negative impact on retirement plan if not revised
- Hyperinflation—defined as 50% per month inflation—could lead to an economic collapse
By re-evaluating your portfolio with a long-term mix of the right assets, you can hedge against the impacts of inflation. There are several ways to hedge, including precious metals. Keep in mind that hyperinflation defense almost always involves gold and silver investments.
Hedge with Gold and Silver
With the current printing of money and the resulting value of the dollar going flat, investors must make a plan to hedge against inflation. If you look at historical black swan events:
- 1997: Asian Financial Crisis
- 2000: The Dot-Com Crash
- 2001: Crash of 9/11
- 2001: Fukushima Nuclear Disaster
- 2008: Global Financial Meltdown
- 2009: European Sovereign Debt Crisis
- 2014: Crude Oil Crisis
- 2015: Black Monday China
- 2016: BREXIT
It’s a time when investors find gold and silver a sound, a tangible commodity that lasts the seasons of inflation. Speak with an expert at Reagan Gold Group to learn more about what you can do to prepare for the frightening times ahead. It is not too late. The new government impact on investments is inevitable—how they impact your financial portfolio can be planned out. Find out more.