Where to invest after RBA rate decision…not Australia

Right on cue, the RBA raised the cash rate 25bps to 4.35% today.

You’d almost wish they’d ripped the band-aid off and caved the whole thing in.

You might share the thinking of a lot of Aussie punters right now…

“Wait, should I invest in bonds?”

“Wait, I’m going to get soaked on capital gains tax (CGT)?”

“Wait, why invest at all?”

Let’s be honest, the current status quo is telling you one thing…

Give up!

So let’s look at some of the numbers in the Australian economy.

(Which along with potential for a diesel crisis is helping drag the ASX 200 down)

They aren’t good…

Now these are rough figures; there are caveats, of course.

But there are around ~2.5M public sector employees, accounting for ~9% of the total population.

Public sector employees are ~14% of the working-age population of this country.

NDIS and Centrelink recipients (~750K + ~5M) make up an additional 5.75M.

Add that 5.75M government-money recipients back to the public sector employees…

And we get ~8.25M people (government money types) against ~18M working-age people.

Point is, it’s getting close to a 50/50 ratio between those that are of working age that make money in the private sector vs. those that receive money from the public coffers.

That’s why people want to give up.

Economics is as straightforward as it is dismal.

Where you provide incentives, you get behaviour.

And productive behaviours are being punished.

So where do you invest in this environment?

There are some great projects in Australia; we’ve got great dirt here.

But right now, I just can’t see much viability for big projects in this country until the government changes.

That means, as much as I like a smattering of niche mineral project developers, the majority of viable investments will be located outside of Australia, even if they are listed on the ASX.

In contrast to Australia, Canada is showing some ambition — they’ve created a special office to help push through “super-projects”.

The Canucks are aware that their bureaucracy creates inertia (the same way it does here), and well, they’ve at least created a new government department to fight off the other government departments.

But here’s the message of hope…

There are some incredible projects on the ASX that are located outside of our borders.

I’m thinking nickel, copper, lithium, uranium and other commodities we need to push prices down.

Just take a look at the nickel price recently:

Source: Trading Economics

[Click to open in a new window]

Prices like that incentivise institutional investors to allocate capital to well-placed nickel projects. Provided they’re in a mining-friendly jurisdiction.

That’s what happened with one company I recommended a few months back to readers of Australian Small-Cap Investigator.

This company is pushing towards a final investment decision on its large nickel sulphide project in Brazil.

And they have, “received strong interest from ten leading financiers.”

So yes…

While Australia’s economy and government is telling you “Flee! Flee!”…

There is hope to be found overseas.

Good luck, and happy hunting.