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Surviving stagnation with gold bullion investments.

February 16, 2011 – America’s near future is not a pretty picture, but we can make the most of it by investing in gold bullion. All the talk about economic recovery has been aimed at restoring the annual GDP growth to the 50-year average level of 3.3%, but “without a big productivity boost, the U.S. may be heading for decades of stagnation,” says Justin Lahart in a Wall Street Journal blog.

Productivity gains account for only half of that historical growth, Lahart says, with the balance attributable to steady expansion of the labor force. Now, however, the growth in the labor force is rapidly declining as baby boomers retire and participation by women levels off. “As a result, the contribution to economic growth from a growing labor force will amount to only 0.5% a year over the next decade.”

It is possible to boost real productivity to compensate for the declining contribution of the labor force, but naturally industry is taking the short-term view while the government remains focused on the quick fix. R & D investment has decreased significantly in recent years as has growth in business expenditures for capital equipment and software. What productivity gains there have been are focused on efficiency rather “than on making higher quality and more advanced products that improve people’s lives,” which is the only sustainable driver of increased productivity.

If productivity gains continue at the historical rate, the annual growth in GDP will drop to 2.2%, a decidedly sluggish performance that would see our living standards fall ever farther behind those in the emerging economies. It would be “bad news for the dollar, for stocks and for bonds (and therefore interest rates). It would make the nation more prone to recession.”

The good news, however, is that gold bullion investments will not stagnate but will continue to follow the growth of the global economy as a whole.

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Jonathan Monroe

Senior Staff Writer -

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