Economic Disparity & Bullion

A few reports emerged last week that reinforce the recent findings by Oxfam which, as a reminder, found that “the world’s richest 80 people own the same wealth as the poorest 3.5 billion people…. extreme inequality poses a growing threat to global security and economic growth…. in Australia. The richest 1% of Australians now owns the same wealth as the bottom 60%.”

Last week the Organisation for Economic Cooperation and Development reported that in most of the 34 countries in the OECD the income gap is at its highest level in three decades, with the richest 10% of the population earning 9.6 times the income of the poorest 10%.  In the 1980s this ratio stood at 7 to 1.

Experts unanimously say this can only end badly with social revolt as it has many times before.

The clear culprit is the monetary stimulus that has flooded global markets dressed up as saving the world post GFC.  We write about it regularly (QE, near zero interest rates etc).  What these and other reports show clearly is that this has enriched Wall Street and not Main Street.  Last week’s awful Consumer Comfort and Economic Expectations data prints painted a very clear picture by the majority who can’t afford to play shares and property.  So whilst financial press talks of the US recovery the average American is not seeing it.  We are more open about how ordinary things are in Australia and many are feeling the impacts.  

Printing money and near zero interest rates hurts savers and rewards market players (the latter for now, until it doesn’t…).  

What everyone can do right now though is buy silver and even small gold bars.  When this unreal market corrects, and it will, the ordinary man holding bullion might actually have the last laugh.  

Let us leave you with this quote from ZeroHedge last week…

“SUMMING IT ALL UP FIRST - WE HIT RECORD HIGHS TODAY ON THE LOWEST VOLUME OF THE YEAR AS GLOBAL MACRO DATA MISSED EN MASSE... 

In the last 12 hours  - China PMI Miss/Drop, Japan All Activity Index Miss/Drop, France Services PMI Miss, German Manufacturing & Services PMI Miss/Drop, Eurozone Composite PMI Miss/Drop, Chicago Fed National Activity Index Miss/Drop, Initial Jobless Claims Miss/Drop, U.S. Manufacturing PMI Miss/Drop, Bloomberg Consumer Comfort Plunge, Philly Fed Miss/Drop, E.U. Consumer Confidence Miss/Drop, Existing Home Sales Miss/Drop, Kansas City Fed Collapsed... and Stocks Surge...”