Wealth / Money

US financial fragility — claims vs. cash

Current Reading (December 2025)
305%
3rd highest in 100 years
Only exceeded by 1999 (319%) and 2000 (307%)

What This Means

For every $1 of actual money in the US economy, there are $3.05 in equity wealth claims. If too many people try to sell at once, there isn't enough money to absorb the selling — prices must fall until claims match available cash.

📈 Historical Ratio

🎯 How to Interpret

< 150%
Healthy — ample liquidity
150-200%
Normal — typical bull market
200-250%
Elevated — late cycle caution
> 300%
Danger zone — historically precedes crashes

📊 Historical Peaks

1999 319% Dot-com peak — crashed 50% over 2 years
2000 307% Post-peak, correction underway
2025 305% Current — we are here
2021 279% Post-pandemic stimulus peak
2007 238% Pre-GFC — crashed 55% over 18 months
2009 104% Post-GFC bottom — best buying opportunity
Bubbles occur when the amount of financial wealth becomes very large relative to the amount of money, and bubbles burst when there is a need for money that leads to the selling of wealth to get it.
— Ray Dalio

What To Do

1. Don't Panic Sell

This is a warning signal, not a timing signal. The ratio was elevated for 2+ years before the dot-com crash. Being "right early" is functionally the same as being wrong. Don't try to time the exit.

2. Diversify Away from 100% Equities

If you're heavily concentrated in stocks, gradually reduce exposure. Don't do it all at once. Consider moving 15-20% into non-correlated assets over the next 3-6 months.

Target: 70-80% equities max

3. Hold Physical Gold

Gold is the asset that survives when money printing devalues cash and crashes devalue equities. Physical gold has no counterparty risk — it's not a claim on anything.

Target: 15-20% in physical gold

4. Maintain Cash Buffer

Have 6-12 months of expenses in actual cash (high-yield savings, money market). This lets you survive a crash without forced selling and gives you dry powder to buy the dip.

Target: 6-12 months expenses

5. Mentally Prepare

A 30-40% drawdown from here is historically normal. It's happened after every previous 300%+ reading. If you can't stomach that, reduce equity exposure now.

How to Buy Physical Gold

Not ETFs. Not futures. Actual gold you can hold.

$4,350 per oz (spot)
+65% YTD

Choose American Gold Eagles

The most liquid, universally recognized gold coin. Minted by the US government. Easy to buy, easy to sell. Available in 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz sizes.

1 oz is most cost-efficient (lowest premium). Smaller sizes have higher premiums per oz but offer flexibility.

Compare Prices at FindBullionPrices.com

Before buying, check FindBullionPrices.com — it tracks real-time prices across 30+ dealers. Look for lowest premium over spot (typically 3-7%).

Buy from a Reputable Dealer

These are the major, trusted online dealers:

SD Bullion
Often lowest prices
JM Bullion
Reliable, fast shipping
APMEX
Largest selection
Money Metals
Low premiums
Pay by bank wire or check for lowest prices. Credit cards add 3-4% fee.

Store Securely — Split Locations

Don't put all your gold in one place. Split between:

Home Safe (50%)

Immediate access, no counterparty risk. Get a fireproof safe, bolt it down, don't tell anyone.

Bank Safe Deposit Box (50%)

Secure, off-site. ~$100-300/year. Note: Not FDIC insured, access limited to bank hours.

Calculate Your Target Amount

For 15-20% of portfolio in gold:

Example: $500K portfolio → $75-100K in gold → 17-23 oz at current prices
Cost: ~$4,500-4,700 per 1 oz Eagle (spot + 3-7% premium)

Schwab Cannot Do This

Charles Schwab does not sell physical gold — only ETFs (GLD, IAU) which are paper claims, not actual metal. For physical gold, you must use a dedicated bullion dealer. This is intentional — you want the real thing, not a promise.