At age 67, Nick Barisheff, CEO of Toronto-based Bullion Management Group Inc. (BMG), is worried about the financial health of his generation.
He says too many retirees or should-be retirees suffer from “financial repression” — where savers are systematically punished by negative real interest rates, initiated by debt-laden governments.
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“Financial repression is a policy that sees many central banks cap interest rates for fixed income investors below the real rate of inflation,” says Barisheff. “It liquidates the real value of government debt, but is devastating for retirees that depend on the cash flow from their investments.”
He adds, “Many people my age are panicking because traditional stock and bond investments are just not working. Many are, resigning themselves to working into their 70s if they are able, or taking risky bets to chase some form of income stream.”
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Governments used financial repression policies worldwide in the post-WW2 period to pay off war-related debts. According to a 2011 working paper, “similar policies to those documented here may re-emerge under the guise of prudent regulation, rather than under the politically incorrect label of financial repression.”
In 2013, Barisheff suggests those policies are fully in place, and on the rise, confiscating the purchasing power of the elderly. “By keeping interest rates on savings low while setting inflation loose with constant rounds of monetary easing is an insidious, hidden form of wealth confiscation inflicted on elderly savers.”
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To that end, BMG has constructed a new mutual fund that combines uncompromised gold bullion with a mechanism to receive monthly cash flow from capital gains in a tax-efficient manner.