The “Bunker Mentality” is Big for the Wealthy in 2020
For the wealthy in 2020, it’s all about the bunker.
“World’s super rich are hoarding physical gold in secret bunkers,” a Russia Today headline declares.
New research from Goldman Sachs indicates that stores of physical gold — that is to say, actual gold bars in vaults — are accumulating faster than visible purchases of gold ETFs (exchange traded funds).
When it comes to gold, there is “paper” ownership — where you purchase an ETF, or a futures contract, or some other proxy through a brokerage account — and then there is physical ownership. The second route is preferable in the event of a real emergency, like, say, the financial system breaking down.
But secret bunkers aren’t just for gold anymore. They are trendy for people too.
“Billionaire Bunkers: How the 1% Are Preparing for the Apocalypse,” a CNN headline read in August. Today’s doomsday bunkers have indoor pools, underground gardens, and simulated natural light.
Remodeling old military and government spaces is also a hot trend.
For example, in London, a space that was designed to shelter British government employees from the fallout of a nuclear winter was converted into a $4 million luxury hidey-hole.
Political trends are inspiring a bunker mentality too. The 2020 U.S. presidential election is a common topic among money managers because the choices are so dramatically different, with potential for a big divergence in market outcomes depending on who wins.
For example, as wealthy Americans with large concentrations of wealth watch Bernie Sanders surge in the polls, the bunker mentality calls out to them: “Better park some more assets in a proverbial fallout shelter, just in case.”
The bunker phenomenon is global too.
For a while now, wealthy investors on the Chinese mainland have been trying to move assets out of the country. Investors in Hong Kong could be feeling comparable pressure as the future of Hong Kong, vis a vis an increasingly hostile Beijing, starts looking cloudier.
Then, too, as unstable places like Iran become even more unstable — note the current regime under siege from its own angry populace — wealthy individuals in the Middle East and elsewhere are increasingly motivated to shelter assets.
This is all quite good for gold, and equally so for Bitcoin. Cold storage vaults — where wealthy investors can store hundreds of millions worth of Bitcoin “off the grid” — are also in rising demand.
For these reasons and more, the bunker mentality could just be taking hold. The more it dominates investor psyches, the more buying pressure gold and Bitcoin can see.
This makes emerging bullish trends in gold and Bitcoin attractive opportunities to be long, with the potential to increase position size on consolidations or pullbacks in the trend.
TradeSmith Research Team