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The U.S. economy is dominated by zombie companies with more debt interest than they have operating income. There’s over $1.4 trillion in outstanding debt between them. This spells doom for the sustainability of our financial system.
It seems likely that the financial Powers That Be will eventually deleverage the economy by inflating the debt away. At that point, you can kiss the value of your dollar—and cash savings—goodbye.
But the stock market isn’t listening to the warning signs. Tesla is at the head of one of the biggest stock bubbles we’ve ever seen. They’re currently 30X price-earnings. The carmaker’s market value flew past the $540 billion mark in late November, about 250X its expected earnings.
The meteoric rise of megacorps like Tesla is creating massive speculative risk across all industries. Today, 50 of America’s top 8,500 public stocks trade at 10X sales or higher.
If these aren’t signs of a stock market bubble, I don’t know what is. When the whales cash out, the zombie-infested system will come crashing down.
Meanwhile, just last week the Dow Jones hit 30,000 for the first time ever. At this point, the stock market is operating in an alternate reality. It’s best you get out while you have the chance.
In China, state-owned zombie companies, once guaranteed to be bailed out by Beijing, are poised for insolvency. This year alone the Chinese government has let 1,900 zombie companies fail, and more are on the way.
This points to a future marked by political instability, widespread unemployment, and a devalued Chinese yuan. Economic downturn in a country that single-handedly represents 28 percent of global manufacturing output would instantly cause a worldwide bear market.
The entire financial system feels fraudulent.
The zombification of the U.S. economy is well underway, and China, the world’s second-largest economy is following in America’s footsteps.
We’re about to watch the world hit the fan. Again.
While the dollar’s still valuable, you’d be wise to get in on precious metals and cryptocurrencies. Instability and uncertainty and here for the long haul, and alternative assets are the only tools we have to hedge against financial collapse.
November saw stocks soar into uncharted territory, ready to come crashing down, while gold and silver retained their value around the $1,750-1,850 mark. Meanwhile, Bitcoin’s price eclipsed $19,129 on November 24, its highest point in nearly three years before slightly pulling back.
The point is, cryptocurrencies and precious metals are the only stable assets we have left. As such, they have a rightful place in any investors portfolio whose goal is to hedge against systemic risk. With economic collapse all-but-imminent, these assets are set for long-term growth while your mutual funds sink deep into the red.
To get started adding precious metals to your IRA or self-directed 401(k), check out this list of the best offshore gold investment companies. For further diversification, consider opening a cryptocurrency IRA with a trusted cold storage vendor.
Mark Turner is an author and editor at Sophisticated Investor. He has over two decades of experience in the financial industry as a broker in both Chicago and New York and has written for several top tier publications. He currently covers the topics of alternative investments, geopolitical events, US economy, portfolio diversification and others.
