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Societal Shifts Present Growth for Precious Metals Market

Commodities / Gold and Silver 2011 Feb 04, 2011 - 02:55 AM GMT

By: Dr_Jeff_Lewis

Commodities It isn’t a secret that the demographics of the financial markets are changing.  The baby boom is retiring, shifting assets from equities and high-risk vehicles toward income generating debt instruments and safer investment alternatives.   It would be reasonable to suspect that the younger generation taking its place is filling the high-risk, high-reward opportunities following the exit of the older generations, but that simply is not the case.

Young Investors Avoiding Stocks

According to a recent article from the Wall Street Journal, a majority (more than three-fifths) of all 20-something 401k investors  have little or no exposure to riskier assets.  That is, very few of the young generation are interested in equities; instead, they want protection.  This shift hasn’t been seen for many, many years, perhaps as far back as the Great Depression.

Post-depression, the demographic makeup of the financial markets changed drastically.  From the early 1900s to the 1920s, investors saw only bonds, currency, savings accounts, and still lingering metals as investment-grade.  Stocks and other risky assets were left off the table.  It wasn’t until the roaring twenties that stock investing became popular before having another falling out at the worst of the Great Depression and the massive decline in stock valuations that preceded the Depression.

Children of the Depression

Interestingly enough, those who had lived through the Great Depression, but were not old enough to become investors themselves, carried on the traits that would be wise in the years ahead.  A phrase we all know well is now used to describe virtually any aging, but thrifty, member of society, “a child of the Depression.” As a whole, they are the “children of the Depression.”

This generation is mostly still with us today and has carried on the investment values they learned years before.  Avoid risk, save smart, and protect your assets wherever possible.  Perhaps more than even those hoarding gold and silver, this generation is known for remarkable prudence, hiding metals and cash not in bank vaults or safety deposit boxes, but in attics, backyards, basements and behind kitchen walls.

To say that today’s latest batch of 20-somethings has as much conviction to their financial principles as did the “Greatest Generation” would be a claim that cannot yet be validated.  However, judging by the slow march toward a reacceptance of gold amongst those who have traditionally shunned it—central bankers, investment bankers, and portfolio managers—means the resurgence in asset protection knows very few bounds.  Interestingly, those who have been the warmest to gold aren’t in the newest generation of young investors, but instead in their middle ages.

It will be interesting to see if the youngest investing generation does make it through to save a portion of their assets in silver coins.  Such a move would be wise, it is believed, because this generation will have to withstand the longest of the crippling damages of inflation.  Likewise, the price at which they purchase is irrelevant, since it is virtually without reason to expect that a patient investor would ever have to sell for less than their purchase price, especially with so much time on their side.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of and

    Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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