“Unbalanced World”

Posted | 15/03/2018 / Views | 4910
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Our tag line is “Balance your wealth in an unbalanced world”.  That reflects that we offer monetary hard and digital assets that have proven to be uncorrelated to financial and property assets.  Gold and silver have a proven track record of increasing or at least protecting wealth in times of economic or geopolitical turmoil and digital assets so far have not followed the whims of financial markets in their relatively short life either.

We won’t go over the uncorrelated piece again.  If you haven’t read about this it is fundamentally important to understand in terms of why you should own gold and silver bullion to achieve true diversification and protect yourself from what is coming.  Read here to recap.

At the risk of pointing out the obvious, let’s look at the ‘unbalanced world’ part of that equation…

Economically we have, to name a few:

  • Financial markets, having been inflated to historic highs with central bank monetary stimulus and despite moribund real growth and devoid of anything resembling normal volatility, are now seeing the return of volatility amid the realisation the central banks are turning off the taps…
  • Property markets, having been inflated by cheap debt and a flight of Chinese capital, are now showing signs of that bubble deflating.  If rates rise quicker than expected will the deflation turn into a pop?
  • Growing threats to the hegemony of the USD / petro dollar through direct traditionally USD trade in the likes of oil under threat from the yuan and the emergence of the SDR.

Geopolitically we have, to name a few:

  • A ‘rogue’ US President starting a trade war with it’s biggest creditor and opposing superpower (China), changing key White House personnel every 14 weeks seemingly working toward a ‘psychologically aligned’ team, the subject of Russian collusion investigations with impeachment outcomes,  unravelling key (peaceful) international agreements, and, well, who knows what next…
  • Tensions directly involving the 3 superpowers of US, China and Russia escalating in the South China Sea and Syria (and the Middle East more generally), and as of last night directly with the UK as well…Throw in the big unknown now between ‘Rocket Man’ and Trump which has gone from brazen nuclear threats to “hey let’s talk” and all the fishy smell that comes with that…. Trump the diplomat?
  • The growing political backlash to incumbents in general but with a definite far right flavour threatening the likes of the EU at it’s core.  The ‘ordinary people’ are feeling left behind by the 1% who have profited from all that aforementioned central bank monetary stimulus and globalism in general.  History shows social unrest and major financial crises can go hand in hand.

Now all of this might work out just fine and you don’t need gold and silver.  Consider however that ‘it’ hasn’t happened yet and yet year to date gold is up 2%, silver down 3%, the S&P500 up 2.8% and our All Ords down 2.4%.  In other words the ‘defensive’ asset is pretty much line ball with the financial assets before ‘it’ even happens….