What is a Recession? Precious Metal Investment – Pt.2LCR Coin, Inc.
In part 1 of our breakdown of what “recession” really means, and how precious metal investment can protect you, we started looking at the causes of a recession. In this second part, LCR Coin will explore some more of these causes, and how the instability and lack of trust in the economy makes precious metal investment a smarter idea than ever.
Falling House Prices and Falling House Sales
In the last major recession – beginning in the US in 2007 and rippling out globally into 2009 – perhaps the most important factor in what causes it was the bursting of the housing bubble in the US.
The push to lend more and more people money for mortgages they couldn’t afford to pay back in the early years of the 21st century meant that people were buying homes just to sell for profit later on, or buying when they could not afford it thanks to banks offering interest-only loans.
When housing prices began to fall, so did the potential profit – so people struggled to sell, so foreclosures increased. Banks became wary of lending even to each other, and the panic among major banking institutions created the perfect storm.
When the first of the large banks began to fold, it triggered the domino-effect of what became known as the Great Recession. In promoting precious metal investment, LCR Coin uses this as a key example as to why it makes sense to have physical assets – the actions of others causing a crash takes any control out of your hands.
While inflation is the increase in value of a currency until it essentially prices itself out of the global economic market, deflation has the opposite effect. When deflation occurs, the fall in value of consumer prices and assets causes a currency to lose its value.
This typically makes things cheaper, which is initially a good thing, but also dramatically decreases demand, with rising unemployment rates and falling stocks soon following as companies struggle to make up for the shortfall.
From here, deflation gets even worse as manufacturers, retailers, and suppliers continue to drop their prices in order to get the public interested in buying again. Once again, when it comes to precious metal investment, gold and silver historically retain their value, offering protection against the unpredictable ups and downs of fiat money.
Unscrupulous Banking Practices
While it seems like many of the causes of recession are based on speculation, caution, and faith, some causes are more sinister and insidious. The practices of some banks, essentially gambling with their clients’ wealth, have been a major contributing factor in past recessions. Above, we mentioned the recession of 2007, which was itself spurred by banks encouraging people to take out loans they could not afford.
This is just one example, and there are countless past examples of banks and institutions lending to those who cannot afford it, selling to the wrong people for a profit, and some shadier, under-the-table transactions that ultimately led to rapid inflation or deflation.
While LCR Coin is not suggesting you abandon all trust in established financial institutions, we do believe that precious metal investment serves as the ideal safety net and protection against such practices.
Precious Metal Investment Can Protect You
While the continued rise and fall of the economy looks set to continue, the value of gold and silver remains relatively stable, and precious metal investment is a solid, stable solution that can protect you, your family, and future generations from another economic crisis. Contact LCR Coin today, and start stringing up your safety net.