Coronavirus has spread! Here is why your retirement is at risk! Learn what the economic fall out may be and how to protect your money.
What is the Coronavirus?
Coronaviruses are a large group of viruses that can cause illnesses as minor as the common cold. The new virus that has manifested in China, however, has pneumonia-like symptoms. It has been confirmed to be a novel coronavirus, or a new coronavirus with symptoms that include fever, chills, congestion, body-aches and a bad cough.
What are the Origins of the Virus?
The outbreak of the new coronavirus began in Wuhan, China—a city of 11 million people—in December, 2019. Cases have now been reported in many provinces of China as well as in Thailand, Taiwan, Japan, Singapore, South Korea, Vietnam, Malaysia, Sri Lanka, Cambodia, Nepal, France, Germany, Australia, Canada and now the United States. In the U.S., cases have been confirmed in Illinois, Washington, California and Arizona.
How Severe is the new Strain?
Symptoms of 2019-nCoV include cough, fever, and difficulty breathing. The symptoms can be quite minor or even nonexistent in many infected individuals but a life-threatening pneumonia can quickly develop in any patient—particularly the elderly or anyone with underlying health problems or a compromised immune system.
How Many have been Infected?
Almost 10,000 have purportedly been infected with the new strain of coronavirus. The death toll now exceeds 200. According to the New York Times, the number of known cases rose by nearly 60 percent in one day. A shortage of test kits has led experts to warn that the real number may actually be much higher.
What is the Economic Threat to China?
The contagion comes at a bad time for China as their economy has slowed, their debt has soared, and they’re still reeling from a punishing trade war with the United States. The virus has caused widespread disruption to travel, transportation, the closing of manufacturing plants, the dismissal of migrant laborers, and the extension of the week-long Lunar New Year holiday in an effort to limit travel. Chinese transportation, tourism, catering, and retail businesses are all impacted. Meanwhile Wuhan, a transportation hub and commercial center has been completely shut-down.
Is there a Threat to the World Economy?
Back in 2008, an internal report prepared by the World Bank estimated that a severe influenza pandemic could kill over 70 million people, cost more than $3 trillion and cause a 5% drop in global GDP. They warned that a global pandemic that lasted a year could trigger a “major global recession.” And if a pandemic were on the scale of the Hong Kong flu of 1968-69 in its transmissibility and severity — a yearlong outbreak could cause world GDP to fall 0.7 percent.
Could the Virus Undermine the U.S. Economy?
In 1920, the U.S. entered a recession that lasted 18 months, and it was directly blamed on the Great Influenza which began in the spring of 1918. The spread of the disease was propelled by international travel, much of which involved World War I troop movements. Dips in macroeconomic activity occurred in both 1920 and 1921. The unemployment rate peaked at 11.7 percent in 1921. On average, the fall in real per capita GDP across major countries from the previous peak in 1918 was 6.6%. Declines in GDP among depression nations included Canada and South Africa at 24% and Italy at 22%. For the U.S. from 1918 to 1921, the drops in per capita GDP and consumer spending were 12% and 14%, respectively, meaning that the resulting contraction was second in size since 1870 only to the Great Depression.
Why is Wall Street freaking out?
Smart investors must weigh both the human and economic costs of the virus. Disease outbreaks can cause immense disruption to travel, trade, and business activity — and pose significant economic risks that show up in stock prices, particularly for industries exposed to transportation, leisure, retail, or to China. World markets are also anxious that the fast-spreading disease could dent the Chinese economy and radiate out to the rest of the world. The knock-on effect would hit China’s business and trading partners, potentially triggering a setback in world growth. This comes at a time when investors were looking forward to improved global conditions so the pace and severity of the outbreak amounts to a significant setback and a Pandora’s box of new and unexpected economic risk.
Why has gold jumped in Value?
First and foremost, the illness remains a mystery. There is no vaccine to prevent its onset or any special treatment to lessen its severity — so the path ahead is uncertain. Gold thrives on uncertainty. The coronavirus outbreak adds to an already-growing list of global trouble spots, setting the stage for a large gold price rally. A perfect economic storm is now brewing and the world is ripe for a systemic meltdown across various industries, markets and financial systems —
and nothing makes a stronger case for holding gold than a spontaneous global economic collapse. Download your free copy of the 2020 Global Gold Report
How Do We Protect Ourselves?
In order to reduce the risk of infection — the CDC tell us to avoid close contact with anyone who is sick, wash our hands frequently with soap and water for at least 20 seconds, and avoid touching our eyes, nose, or mouth with unwashed hands. In order to protect ourselves from Flu-conomics and the black swan potential that the virus poses, gold is a highly liquid asset and an ideal hedge for financial market risk. It is a global store of value and can provide critical and strategic financial cover as the coronavirus spreads and uncertainty, anxiety and chaos follow.