Preserve Your Wealth When It’s All Melting Down…

Preserve Your Wealth When It’s All Melting Down…

Another eventful and extraordinary month is about to end.

One thing that’s dominating recent headlines are meltdowns.

The woke society, comprising Big Tech, Hollywood celebrities, liberal academics, and champagne socialists, has collectively gone into a meltdown as Tesla’s founder and self-proclaimed ‘free speech absolutist’, Elon Musk, paid US$54.20 a share to take ownership of the social media platform Twitter.

The moral outrage from many ‘blue checkmarks’ (verified public identities and influencers) went off the charts.

There was much sanctimonious outcry against a billionaire who decided to buy up a business to implement whatever agenda he wants, in this case, free speech. It’s a travesty that Elon Musk would allow people to say what they like (as long as it doesn’t explicitly direct people to break the law) for fear of hateful speech that can hurt the feelings of minority groups and the vulnerable part of society.

This comes from ‘compassionate and empathetic’ people who support censoring opposing opinions, calling for the torture, rape, and murder of those they declare ‘hateful bigots’ because their views differ.

In other words, it’s a private company, but they cannot do whatever they like!

Watching that meltdown was satisfying, and I reckon there are more to come…

Stock investors…watch the gap below

Meanwhile, there’s the other meltdown, which is the broader market as fears rise about rate rises. The US markets have pretty much given back the gains they made since the conflict in Ukraine began. This is the S&P 500 Index since the start of 2021:

Fat Tail Investment Research

Source: Thomson Reuters Refinitiv Datastream

[Click to open in a new window]

It could accelerate downwards from here now that the Federal Reserve is looking for more aggressive rate hikes in the coming months.

What about Australia? The figure below shows the ASX 200 Index:

Fat Tail Investment Research

Source: Thomson Reuters Refinitiv Datastream

[Click to open in a new window]

Like 2008, the ASX 200 Index seems to be more resilient due to our economy’s reliance on commodity exports. Higher commodity prices coming from inflation have propped up Australian stock prices.

But are we going to be the ‘lucky country’ again?

I’m not so sure this time.

Don’t fall for the official statistics, it’s smoke and mirrors

After all, the Australian Bureau of Statistics reported that the official inflation rate rose from 3.5% year-on-year in February to 5.1% in March. This has prompted the Reserve Bank of Australia (RBA) to hint at a potential rate hike soon, even as early as next Tuesday. The criteria for the RBA to decide to raise the interest rate lies mainly on inflation remaining above their target of 2–3% over an extended period.

Many will take the official statistics to be true. You know that I don’t. Not at all. I wrote about why last year, which you can read here.

I’m confident that none of you would believe that the price levels rose only 5.1% in the last year when we have paid much more at the grocery stores (especially fresh produce), filled up our car at the petrol station, and paid our bills. Even the government knows that inflation is biting and cut our excise tax by half to bring down the price at the pumps to less than $2 a litre.

The government’s excise tax cut is inadequate, nor an optimal way to bring relief to the people.

It is a cheap political stunt.

The only thing that’s cheaper and more idiotic is the Biden administration using the strategic oil reserves (used for emergencies and wartime) to bring down the price by a couple of cents (and then having the Press Secretary Jen Psaki brag about this favour the administration did for its people).

Basically, governments are sticking it to their people.

Elections…have a say, but they make you pay

Now, many will find comfort in Australia’s democratic system. Better yet, they claim that it’s an all-inclusive political system where voting is compulsory for every citizen above the age of 18.

Therefore, you can’t say that you weren’t heard…and the results reflect what everyone wants.

In a society without corruption and bad faith, this is correct.

The only problem is that there are some who are way ahead of us that have found a loophole in this game.

Let’s just say the biggest winners in elections are those who get into parliament (fat, cushy salaries and pensions) and the corporate lobbyists who hedge their bets by sponsoring both parties.

Left or right, red or blue, it doesn’t matter much.

The most you can hope for is to work out which side will make you pay less and keep whatever liberty you still have left.

This election is no different.

Instead of ‘may the best man win’, it’s ‘may the worse one lose’.

Preserving your wealth with a safe-haven asset

It seems like Australians are up for some testy times ahead.

There’s an election coming up where we’re choosing between two unelectable parties. On top of that, there’s a potential RBA rate hike as global markets unwind the excess binge-buying from phony money.

The best strategy is to position your wealth in the right place.

Will your investments help you sleep soundly at night?

If not, it’s a good idea to have some gold in your holdings. It is unequivocally the safe-haven asset.

Even better is that the fiat currency system is truly careening out of control and any wrong moves by central banks could cause the decoupling of our markets from fiat currencies.

When that happens, how high can gold go?

One can only imagine.

God bless,

Brian Chu Signature

Brian Chu,
Editor, The Daily Reckoning Australia