Financial Wellbeing in 2023
Financial Wellbeing in 2023
I have had the opportunity to speak in front of hundreds of groups over the past two decades. Most of these speaking engagements were often designed to share information on Gold, Silver, and other precious metals. This has indeed been the case for about 90 percent of our seminars. But very few of these seminars look at wealth as part of a well-rounded plan for well-being. I originally had an opportunity, back in 2012, while working at another smaller firm, to speak at the Seed Event in Vancouver with a group of interested investors who also had a keen sense of interest in well-being.
This speaking engagement coincided with a significant event in Vancouver, BC. The event showcased keynote speakers Deepak Chopra, Adam McLeod, David Wolfe, and Gerald Celente, founder of The Trends Research Institute and publisher of the internationally circulated Trends Journal newsletter, whom many of you will recognize and have listened to my interviews on occasion on the radio.
Before my speaking engagement, I spent an evening having a wonderful meal with Gerald discussing trends at large, the state of affairs in economic terms, and the reality investors face today. For those of you who are unaware, Gerald has been speaking about the importance of Gold and Silver ownership for decades and has made it a part of his financial well-being plan, which has aided him in achieving his life goals.
Gerald has practiced what he preaches when discussing why we should all think about our well-being, state of mind, and financial well-being. He says it might be the most important thing we do in attempting to achieve increasingly successful life outcomes.
For the past 19 years, I have had the unique privilege of creating, writing and now contributing to and editing, for thousands of people, various precious metals newsletters and communique about our firm's take on the Gold and Silver markets.
We have worked with many people, from directors of multi-billion-dollar companies to those buying a single Silver coin for the first time. In doing so, I have observed patterns that influence people's experience of well-being in virtually every area of life: physical, emotional, psychological, spiritual, relational, and financial. Through it all, I have had a fascination with the area of financial well-being.
Financial well-being considers more than just the material areas of financial success. It also includes how your beliefs, behaviours, plans, fears and dreams about money and wealth affect your life experience and outcomes.
To me, financial well-being isn't just about how much money you make, how much money you save or invest, or what your balance sheet looks like. Financial well-being is something that must be assessed by looking at both your perception of wealth as well as your accrued wealth. In other words, how you perceive wealth, view wealth, your opinions about it, the material items you end up amassing and how you navigate both aspects of this wealth journey.
Growth of Wealth - "Material Side of Wealth"
In this aspect of your financial well-being, you can keep track of how much money you have coming in and going out, and you can see, touch, taste, smell, or feel the material items that you have acquired, sold, or given away.
This part of your financial well-being includes financial laws and principles everyone is affected by, similar to the laws of gravity. They include principles like "To build wealth, you must":
1. Have a means of producing income (Typically through products, skills, or services that add value to others and that people want and will pay for).
Spend less money than you make and save the difference (Super tip - a savings of 10% or more of your net income is a good start, but hard to accomplish. Make it a goal!).
Invest a portion of what you save. Balance, diversification, liquidity, and a global focus are all key concepts you should discuss with those you trust to manage your money.
Continue to save and invest until the income produced by your investments matches or exceeds the income you make through your products, skills, or services (and supports the lifestyle you want to live for as long as you live).
Contribute some portion of your income to help others. This is charity or philanthropy, and it helps to add stability to this aspect of your financial well-being. (Super tip - plan it out. Speak with your decision-makers, spouses, partners, and family. Find out the where, what and how much to contribute instead of deciding these things on a whim. Doing this will leave you firmly in control of saying yes or no to those sometimes-pesky callers asking for your contributions yearly.)
For many, the above is indefinable or indescribable because they either:
They Don't generate enough income to pay their expenses and save a percentage.
Generate enough income but spend it without saving or investing.
Spend more than they make and accrue debt that doesn't help them generate more income. (Super tip - the people that I know and work with who are incredibly wealthy all have a very disciplined, almost "dreary" approach to wealth-building. They follow a strict set of rules they have established concerning wealth accumulation and do not stray from them.)
Of course, there are varying degrees of learnedness when investing and accumulating wealth. Those who study more and do more due diligence learn how to moderate the risks and take advantage of the many opportunities that can compound their investments much faster. This is precisely how the rich get richer.
The Perception of Wealth - "Feelings and Perceptions to Wealth"
On the other hand, the perception of wealth is the world of the immaterial, the world of "feelings and perceptions." This is where your beliefs and your psychology around finances come into play.
Your unique or personal experience is crucial to this aspect of financial well-being.
How do you "feel" about your current financial situation, for example?
Are you satisfied? Are you mortified? Are you fearful? Are you enthusiastic?
How much is "enough" money? Do you feel "pedestrian"? Are you inspired, frustrated, or indifferent about finances?
The above includes principles such as:
You have a financial "thermostat" based on your beliefs about money, which controls the base and ceiling for how much you make and keep.
Money is a way to document the exchange of energy, and pieces of paper (In the past, backed up by Gold and Silver, but now just pieces of paper.) or digital blips on a computer screen are how we keep track of the exchange of this energy.
How you feel about money and how much you make results from your acclimatization and culture around your wealth. Therefore, your financial circumstances are typically very similar to your closest peer group. (Super tip - It is widely accepted in psychology that we tend to experience outcomes like that of our closest peer groups. In other words, we may think we are middle class because of our circumstances. Still, psychology suggests that if we changed the group we socialized with and, as an example, became part of a higher-wealth peer group, we would most likely become far more wealthy. To be more affluent, you must act, think and interact with wealthier peers.)
The experience of "wealth" is not a result of finally having "enough." The experience of abundance comes first, then the floodgates to "more than enough" open.
What can you do to multiply or create flourishing financial well-being outcomes? Here are some ideas for merging the two aspects of finance in no particular order:
Study good material and scrutinize or examine your beliefs and opinions about wealth. Write down all your beliefs about wealth and money and ask to share them with someone financially well-off. Their feedback will show you exactly where your limiting beliefs lie.
Compensate yourself first. Always save at least a percentage off the top before you spend any money you make. This builds your self-confidence and self-discipline, and you'll be amazed at how quickly you can save. (On a side note, it was not so long ago that our parents and their parents were saving a minimum of 10% or more in Canada on a regular long-term basis. Today the savings rate in Canada is approximately half of that at 5.8%)
Elevate your financial IQ. Nobody is going to do it for you. You must learn about finance by reading and attempting to grasp the knowledge by asking questions along the way of those you know around you and, perhaps more importantly, those you do not. Start reading the financial section of the paper daily. Watch the financial news and investigate; always read behind the headlines. Take some finance courses and always attempt to learn more about and master your investments. (Super-tip - I have done enough seminars to know that very few people know where their money is invested. If you want to know, ask yourself how much you know about the companies within any mutual fund you own. Learn the language, and you will begin deciphering the financial realm and feel more self-reliant.)
Get in the game. Once you start both saving and learning more, opportunities will open up. If you do not have any money saved, don't expect investment opportunities to show up. With some savings and education, you get yourself in the game.
Talk to affluent people. Who do you know who is financially free, happy, and generous? If you do not know anybody, then start looking! A truly wealthy person wants to support others to lift themselves, and when they have the time, they'll happily give you a hand-up (not a hand-out). A financially well-off mentor could transform your life.
Take a look at your peer group. Proximity truly is power. Who do you spend time with socially? Are they financially "well-off"? Love your friends and family, and simultaneously branch out to ensure you spend more time with confident, appreciative, and generous people. Their wealth perceptions will rub off on you.
Start now. Don't wait for "a lower price" that might never appear. Bernard Baruch, a famous American financier, once said that "Knowledge plus action equals success, but knowledge without action equals failure." (Super tip - Take risk where it is warranted based on your ability to "BALANCE" your wealth. I am not your financial planner or advisor, and these are only my opinions, so if you believe this concept of financial well-being is warranted, apply it to what you already have. I love physical Silver as a way to balance my wealth. It gives me a non-paper asset; it has an excellent track record (Averaging 8%-10% per year over the past 20 years) and is liquid, adding more power to my wealth.
What Lies Ahead for Gold and Silver In 2023
Surprise! It's already March, Q1 2023 is almost over, and Gold and Silver await buyers. There has already been one bit of profit-taking, and we are hoping to see more. Gold finished 2022 with a gain of about 1.4% in USD, while Silver finished up nearly 1% in USD. Both remain in buying zones as we approach the end of the 1st quarter, and both are below their 2022 prices!
This being said, Gold and Silver will continue to encounter headwinds from a few areas. Headlines will be one of them. Investors make decisions based on them, yet many of the most significant pieces of headline data are now being readjusted one, two or three months after being reported. Much of this readjustment of data is to the downside and negatively impacts investments made initially by investors when the data was fresh.
This readjusted data includes money printing, inflation reports, and housing statistics, all generally and continually painted positively. But the truth is that "real" career meaningful jobs data is weak. Inflation is high as a kite, housing is soaking up $.60 plus cents of every dollar we make, and we are on the cusp of a significant decline.
The very talented Danielle DiMartino Booth is one of the people I trust to accurately predict financial trends and share accurate information about the problems we face in finance, banking, and the economy. I have interviewed her on more than one occasion. She had this to say about inflation and the accuracy of it being reported on Twitter recently.
"When I was inside the Fed, it was acknowledged internally that the core PCE was a broken metric that understated & misrepresented true inflation. The decision was made to continue using the broken gauge because Fed models would not work if true inflation were used. QE is a lie."
So expect continued headwinds and turmoil, historically making Gold and Silver optimal choices for balancing your wealth, especially in 2023.
As for the world economy, trouble lies ahead. We should accept that things will get worse for a while here in 2023.
The housing craziness of 2020 has now spiked and is in total reversal. Here at home in Canada, expect sales and prices to continue downward as we believe the spring will increase competition for folks looking to get out as quickly as possible. Low mortgage rates are gone. Consumer debt has begun another upward trajectory, especially credit card debt and personal loans.
As for the stock markets, they are more than likely to continue running sideways or downwards depending on the news, but NOT upwards. The lack of appetite, loss of volume, and consumer investment is proven, and the cheap money that encouraged this buying over the last decade is gone. Mark my words. I said back in 2021 that.
"It will be a difficult notion to support the lowest interest and mortgage rates in history much past Q4 2021 as inflation rears its ugly head and interest rates and mortgage rates in North America begin to rise, putting pressure on the housing,
stock, and bond markets before the end of the year or perhaps into Q1 2022."
This is not where I wish we were, but again, balance is and will be the key to maintaining long-term wealth. In my opinion, having some physical Gold or Silver will help this balance tremendously.
In 2023 I expect we will get whacked by inflation in perpetuity. You might now agree that what is shaping up is more likely to be a bout of stagflation.
Seek Advice
My financial planner told me to make sure I max my TFSA in 2023 with a cash position-She has never said that before. It is always expected that the cash will be put to good use. Not hear, not right now. She suggested I create a larger spousal plan and maybe a spousal loan. She also advised people I know to consider income-split pensions. She suggested I set up a joint non-registered account and consider a tax-deductible HELOC investment loan. She was alright about the addition of increased Gold holdings. She was happy that I continue to use Silver to increase my wealth in the part of my "value" portion of my portfolio, where I use more of my disposable income. She also believes it is extremely undervalued but more volatile than Gold. In summary, she told me, "this is war" and to "suit up." It is all hands on deck when you hear that from those you trust (And yes, even doctors have a doctor).
Speaking of Gold and Silver, they remain very well supported in many regions of the world, such as Asia, Europe, and North America, and our last Q4 numbers for demand were through the roof at Delta Harbour. Buying has now intensified. I believe this will be the case for some time to come.
Investors wanting and expecting significant price action in both Gold and Silver must be patient as this current US business cycle reaches its peak and expires. The likeliness of a spring fling with Silver and Gold is much higher than just 12 months ago. Gold and Silver look poised to recapture some of that previous momentum from 2004, 2006, 2008 and 2011. Bottom-to-top gains in both metals will likely exceed 20%, in my opinion, if we do get a spring fling moment in Q1/Q2
For both Gold and Silver to catch fire significantly and hit multiples higher, as we anticipate it will, the business cycle in the US must reach a climax similar to what we saw at the tail end of the 1970s inflationary peak. We believe it is very close to happening.
Recall your history charts in Gold and recognize a similar "lull to sleep" effect between 1976-1978, similar to what we saw in Gold and Silver pricing between 2012 and 2018.
Back in the 70s, and like we just witnessed in the past decade, many investors became impatient, annoyed, or irritated and were lulled to sleep by the perceived inability of Gold to capture new highs. In the 1970s, it meant a staggering 50%-60% left the market altogether only to witness the most significant modern-day gain in history, up to that point, in Gold and Silver. (Gold and Silver reached all-time historical highs in January of 1980, respectively, taking Gold to $850 Oz and Silver to $52 Oz, some 2300% and 2500% higher than their lows of the same decade!)
The winds of inflation are blowing a full gale, and they will continue to do so for some time. As that happens, banks will likely become very aggressive with new loans because the fractional reserve banking system makes the potential reward worth the risk. You will be encouraged to take on new debt at a rapid pace. (Super-tip – think of the average price of a new car, house, food, and so forth, and compare that with your wage increases in the past 20 years. Are you getting the picture? You now have to do more to balance and grow your wealth strategically, making physical Gold and Silver good optional additions to your overall plan)
The odds are that money velocity will rise strongly in the next two years. The bottom line is that inflation is my biggest concern and rose much faster than anticipated over the last 24 months, which we have yet to feel fully. We have begun a return to the mentality of debt and spending that led to the crash of 2008. That could create an institutional and retail investor stampede into undervalued Gold and Silver.
Even the most gullible investor does not want to get the impression that they are being looked upon or thought of as one of those fabled people who are "born every minute." This is the time to buy and take home or store physical Gold and Silver and make it part of your well-being plan. Whether in your registered RSP or TFSA, through direct delivery, storage, or even one of our other methods, we are always glad to help. Caution, I am "Long" on Gold and Silver!
Welcome to 2023.
Yours to the penny,
Darren V. Long
Director
Delta Harbour Assets Inc.