This past week on CNBC, economist Marc Faber stated that he believes that there is a 100% chance of a global recession over the next 12 months.
“I think we could have a global recession either in Q4 or early 2013.”
When asked what were the odds, Faber replied, “100%.”
Faber’s bearish market calls have been followed closely since 1987 when he warned his clients to cash out before Black Monday. If you want to know more about Marc Faber, he is the author of the Gloom, Boom, Doom report.
Faber points out that while many, maybe too many, people remained focused on Greece, Europe, et. al., they may be missing more critical, global slowdowns in place like China and India. Faber goes on to note that the HSBC Flash Purchasing Managers Index, slipped to 48.7 in May from 49.3 in April. That marks the seventh straight month that the index has been below 50, a level which indicates economic activity is contracting. Faber also noted the fact that stocks that are linked to wealthy consumers are showing weakness. Faber states:
“That suggests to me the economy is likely to weaken and the huge asset run is likely to come to an end with significant asset deflation.”
Faber goes on to state that he believes that we are looking to see a global recession as earlier as Q4 2012. Faber states:
“I think we could have a global recession either in Q4 or early 2013.” When asked what were the odds, Faber replied, “100%.”
When asked about what assets to allocate in your portfolio he recommends Cash (US Dollars) and Gold.
We understand the tendency to be biased by only looking for information that supports our beliefs and the desired outcome, but, by the same token you can’t fall into the normalcy bias trap. Here is a good description of normalcy bias:
The normalcy bias refers to an extreme mental state people enter when facing a disaster. It causes people to underestimate the both the possibility of a disaster occurring and also its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of the government to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred that it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.
With the bias as our premise, we should note that over the past few weeks we have cited numerous statistics, and facts along with supporting experts all of which point to the fact that we are looking at a recession on a global scale. Many of these same experts and opinions all point to hedging your self directed ira portfolio with precious metals.
So, you look at your self directed IRA and the price of gold and silver and you feel uneasy because of the recent sell off on metals. Go back and read our post from May 27, 2012. Your concerns about metals are unfounded. Now is the time to be a contrarian and look beyond the noise generated by the masses. Now is the time to assess your self directed IRA and determine if and how much of precious metals to place into your self directed ira.
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.