Chaos Brings Opportunity

In an uncertain world, the smarter minds are playing financial defence.

They know that the radical social engineering programs, the debt fuelled government expansion and the fiat currency printing are not sustainable.

It's all supporting our thesis that stagflation is on the way. That's the combination of a stagnant economy with inflationary tendencies.

To put it simplistically, the only growth stagflation delivers is in expenses.

That's why the smart money is moving into purchasing products for future use now (if it can be stored and will be used), or deploying into real assets like gold, silver and the companies that own them.

We've discussed the wisdom and financial reward of stocking up on staples like soap, toothpaste and the like.

Buying now saves you paying more later for something that you'll inevitably use.

In some cases it has delivered double digit returns on the money invested - and unlike interest or dividends those savings are tax free.

But what about defensively positioning your excess money or your superannuation savings?

Many will think that reverting to cash is some defence but it's likely to be the greatest risk to your future wealth.

Sure, we all know it's essential to have some cash on hand, but having most of your savings in cash means they'll be decimated in terms of future purchasing power.

That's what inflation and money printing inevitably do, so a long-term view needs a different approach.

In the last few days I've been repositioning my superannuation stock portfolio and buying large cap resource stocks that are involved in gold, copper, oil, gas, coal and uranium.

Sticking to the big corporates, rather than speculative mining stocks, means I won't get the maximum kick for my buck if my prognosis is correct, but it also means I'll get some dividends and peace of mind.

If I'm wrong and the economy goes gangbusters, they should get the benefit of that too.

I should also state for the record I have not disposed of any of the previous 'annual review' companies I have bought. While they've had a tough year thus far, the underlying business case is sound but they are totally out of market favour.

That's what I mean by people are playing defence. The turnaround story is uncertain so the money is flowing into the tangible and the proven.

That includes physical gold and silver, and of course Bitcoin.

It's a crazy world out there but as the old saying goes, with chaos comes opportunity.

Now might be the opportunity before the real chaos begins.

“In the depth of winter, I finally learned that within me there lay an invincible summer.”
Albert Camus