Well, this is awkward.
The team here at Blue Lake Invest have recently been on a bit of a break, but apparently the minute we try to take a breather the entire world goes mental and there’s 50 new impacts on the ASX worth covering. So just in case you’ve built your apocalypse bunker early and been hiding inside it for the last 3 weeks here’s what you missed.
- Donald Trump is now the (presumptive) Republican Party nominee. This is huge, but naturally we’ve already written a ripping series of articles to prepare you for a Trump Presidency
- The RBA dropped interest rates to a new historic low of 1.75%
Hmm, this sucks. So ‘The Donald’ wants to be the leader of the Free World now that he’s successfully knocked off all the other intense conservative fruitcakes vying for the Republican nomination? You’re probably thinking something along the line of “Well, Ted Cruz is an oily piece of shit who thinks that dildos should be made illegal. I can understand how he was stumped by the Trump”. Bad news, in the latest Guardian poll Trump trails Hillary Clinton by 6 points. Not 60, 6. And he has months to make up that ground. Oh dear.
Let’s be very honest right now. No-one has any idea what will happen to global markets or the ASX should Trump actually become president. The possibilities are practically infinite, and range from destroying all known wealth to creating a period of unprecedented corporate returns. We think that the most likely scenario is that global market volatility will increase, and that investors will flock to the safe havens of gold, platinum and silver. You can use this as a simple strategy, and it will effectively hedge you from any kind of US chaos that may eventuate. I’ve already purchased as much ASX:QAU as I can (the BetaShares Gold Bullion ETF). Have a look at the list here for a full range of ASX listed ETFs and see if any sparkly metal takes your fancy. You may wonder why gold is my metal of choice, and the answer remains unchanged; if the US Dollar crashes or is displaced as the worlds reserve currency a reversion to the gold standard could eventuate and send the price of gold though the roof. Have a look at our GFC MK II series for further details.
As if a Trump presidency wasn’t bad enough we have to face into the fact that global interest rates seem to be tanking as central banks do all they can to stimulate their local economies. This leaves investors in a very sticky situation, as you can’t park your hard-earned in term deposits or a savings account and expect any kind of decent return. This renders your bank account equivalent to a glorified safe-holding box. But, as we’ve discussed share-markets aren’t much better as volatility is through the roof (also likely to get worse due to the Trump factor) and Australian corporate profitability is on a lengthy downward trend, eroding ASX dividends and yield. Yuck. Some commentators have already predicted that this is “the new normal”, and the golden days of decent interest rates and share-market returns are gone forever. Whether or not that’s true remains to be seen, but it’s definitely true for the present so you’re going to need a strategy.
Here’s how Blue Lake Invest sees the options:
- Play volatility for a fool and stock up on precious metals to benefit from turbulence
- Seek gains in different non-ASX domains (such as land or property, or ASX:VAP)
- Smash as much of your wage as possible into an online savings account with the aim of safety and protection from meltdown
- Any mix of 1-3.
Get in touch, share the love and best of luck!