It only seemed like yesterday when we farewelled 2023 and embraced 2024. Now, we’ve entered the second half of what’s already an eventful year.
I don’t need to roll off the extraordinary things that happen every week. The news feed seems to continually bombard us with the most recent exclusive story to stir us to have an opinion and take a stance.
Take last week, for example.
In the US, we had the first Presidential debate.
For many of you, it wasn’t surprising to see the incumbent President Joe Biden listlessly mumbling and fumbling over his words. Neither was it seeing President Donald Trump’s brashness on full display, complete with his liking to sidetrack us on embellished stories of his achievements.
But what surprised me (and possibly most of you reading this) was how the CNN moderators, Jake Tapper and Dana Bash, put up an oddly professional front by not going to bat against President Trump.
The other was the coordinated move by the mainstream media to call their much-loved Biden to make an honourable exit while there was time to groom their replacement candidate.
Back home, we had the latest political drama: the Labor Party indefinitely suspended Senator Fatima Payman for voting against the party line on recognising Palestine’s statehood. This move may well cement the government’s demise in the next election, not so much because Australians agree with her stance but because the Labor Party’s double standards will alienate its constituents.
From now on, I won’t belabour (pun intended) the unfolding political circus. There’s still so much to watch in what I believe is the global reality TV show, of which we’re cast.
I’m here to discuss what you and I (and every ordinary Australian) should care about.
Elites fiddle as rising living costs
turn up the heat
Not all of you are that thrilled by the antics of the-powers-that-be who grace and flop on the global stage.
We want to make ends meet in this difficult economy, and it’s getting tougher with each passing month.
You might even feel alone in your family or social circle over this issue.
Ever tried talking about how it’s more difficult to pay for the bills or negotiate a raise to help you stay afloat? Sometimes you get a blank look, a shrug or an indifferent ‘it’s always been this way’?
It’s harder when the people you address follow the news and trust the talking heads who utter sweet nothings and create an illusion the economy is travelling smoothly.
Let me give you an example.
The Reserve Bank of Australia (RBA) released its monthly inflation indicator for May last week. It showed that inflation accelerated again last month, rising from 3.6% year-on-year in April to 4%.
There’re three points I want to make about this announcement.
The first is the obvious point that no Australian would agree that the general price levels rose a mere 4% since last year. Not with the rate in which food, fuel, housing and utility bills have escalated.
A 10–12% reading may be more believable. And that’s still understating it, in my opinion.
The second is a subtler point. My colleague, Charlie Ormond, perceptively raised the point in our company-wide chatgroup that the cost of energy would’ve been 14.5% higher from the past year if not for the energy rebate scheme.
This reinforces my previous point that those in power manage the data and our reality to slowly boil the proverbial frog (us).
The third is a more worrying point. Inflation appears to be accelerating. We’ve only just gotten into the mindset this year of expecting rate cuts.
Now the RBA might position itself to RAISE rates.
How to stay ahead of impending disaster
For hundreds of thousands of Australian families, this is a dreadful prospect. An economy that’s going downhill amidst a growing burden of debt.
For some context, let me show you the stark reality of our falling real income and the runaway UNaffordability of housing with these two figures:
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| Source: ABS, Refinitiv Eikon |
The first figure shows that while the average income of NSW employees has increased steadily, it has plunged relative to gold.
In less than 25 years, real income has fallen to a third of what it was. It has halved in the last 12 years.
If you’re wondering why many households are dual income and still need to be deeply in debt, the answer is right before you.
The second figure shows that the median price of a property in Sydney has climbed sharply since 2010. What once took six years of an average income to buy is now almost 14 years.
To put in context to the rest of the world, Sydney now ranks second (or third if you include Singapore) in the most unaffordable cities for housing. This is according to The Visual Capitalist, which you can read here.
Here’s a figure showing the top 12 most unaffordable cities:
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| Source: The Visual Capitalist |
It’s surprising that Melbourne and Adelaide also made it on the list, a dubious honour indeed.
Many will undoubtedly need to change their mindsets, given the insurmountable odds of owning their home before retirement. This is especially the case for those aged 40 or below.
Even those who own their home or have a mortgage to pay aren’t immune. The rising living costs bite everyone, some more than others.
Our plan to help you navigate the hostile Australian economic conditions
Now, I did leave a clue earlier about how you can prepare and stay ahead of the looming dangers of an economic crisis and potential societal chaos ahead.
Yes, one potential solution is to build some of your savings in gold.
I call it a wealth equaliser. This is because, over the long-term, gold rises relative to the value of global currencies. Governments can’t resist the temptation to borrow and spend, while businesses and households will undoubtedly follow suit.
But don’t think that gold is safe from the turbulence of the markets. In the short term, prices can fluctuate and even drop for several years. We saw that from 2012–14 and also in 2020–22.
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| Source: Refinitiv Eikon |
The good news is that gold has done well in recent times. Since the start of the year, it’s up 12.6% in US dollar terms and 15.9% in our dollar terms. It started taking off from mid-March as the US Federal Reserve foreshadowed three rate cuts this year.
Many who know their monetary history or have wealth passed from their ancestors recognise the value of having gold in their possession. After all, it’s been real money for millennia, long before society developed substitute money in fiat currencies and credit.
Therefore, I propose you delve into this long-known secret, hidden from many in plain sight.
Besides gold, other ways exist to help you preserve and build wealth. These include solid dividend-paying stocks, mining companies, technology companies, and cryptocurrencies (for those who like high volatility plays).
Here at Fat Tail Investment Research, we’re prepared for challenges that threaten the Australian economy. It’s in a strategy plan we call ‘The Decade of Decimation’. Why not check out what we have for you by clicking here?
You might be planning for the raging waters ahead already, but let us guide you and boost your chances.
God bless,
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Brian Chu,
Editor, Gold Stock Pro and The Australian Gold Report
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