Asset manager and author Peter Grandich recently spoke to Kitco News about the ongoing banking crisis in the US, the scale of the upcoming recession, and other issues. What should investors expect?
The founder of Peter Grandich & Co believes that the bank bankruptcies increased the probability of a recession in the US. While he doesn’t expect a system-wide collapse, he thinks that the crisis could be prevented if the Silicon Valley Bank had more efficient management and if they had seen its weaknesses from the start.
Grandich sees the roots of the banking and debt crisis in the relaxed monetary policy that the Fed pursued for decades. This policy led to borrowing becoming extremely cheap.
The mid-term forecast is still gloomy: the expert feels that America has entered the worst social, economic, and political period in its history. It will be much harder to earn money in the security markets than it has been in the past 20 or 30 years. Grandich thinks that developing markets will suffer, too, as they have been relying on investments powered by cheap money.
Grandich even stated that globalization itself and global credit expansion are dead. Those countries that are dependent on international capital flows are going to go through some hard times. The expert doesn’t see any large country as a worthy target for investment at the moment.
As for gold, Peter Grandich views it as a great opportunity – both as a safe haven or inflation hedge and as a way to increase one’s capita. He expects gold to reach a new ATH.
Apart from the banking and debt crises, Grandich sees one more serious challenge on the horizon: the pension crisis. Almost 75% of Americans live from payday to payday, and in the past couple of years inflation has forced them to use credit cards to buy essentials. They haven’t had a chance to save money for retirement – and they won’t have an opportunity to do so.
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