Safeguarding Wealth Amidst Market Turmoil

• Regional banks face liquidity risks, so be cautious of bank stocks.
• Don't expect the Fed to resolve high inflation - consider hard asset hedges.
• Position for shifts in global trade and currency usage away from the dollar.
• Central bank digital currencies will reduce privacy - own physical metals.
• Gold, silver, copper, uranium and energy investments can preserve wealth.

Mounting risks across markets needs actionable guidance to navigate the uncertainty. For investors seeking stability, here are some thoughts on banking troubles, inflation, global shifts and privacy threats are invaluable.

Regional Bank Stocks Face Liquidity Dangers

Precarious liquidity conditions at many regional banks will endanger their stability. As the Federal Reserve has hiked rates, bond values have dropped. Banks hold bonds to sell if depositors suddenly withdraw funds. However, with declining bond values, banks have less ability to meet urgent cash needs.

This squeeze has already led some banks to fail. And deposits at others remain “hot money” prone to rapid withdrawals. These risky deposits have jumped over 85% in the past year. The FDIC chair has warned such moves raise instability. At the same time, banks are taking losses on consumer loans, mortgages, and auto loans. Rising interest costs have left borrowers unable to pay. Banks will have to write down hundreds of billions in soured loans, eroding their financial safety further.

Investors should be wary of Regional bank stocks amidst the turmoil.

In total, regional banks confront grave liquidity dangers. The Fed labeled 732 banks at risk of failure from these trends. Alarm bells should be ringing!

Don’t Count on the Fed to Tame Inflation

Despite its claims, the Federal Reserve has minimal power to control overall inflation. Especially energy costs, which are still soaring from geopolitical tensions the Fed can’t influence. Further supply cuts by OPEC and Russia will maintain upward pricing pressure.

As energy inputs impact all goods and services, these spikes feed broader inflation. Even the Fed’s preferred “core” CPI includes energy costs that can’t reasonably be excluded. While rate hikes may temporarily slow inflation's pace, prices still rise under this policy. Investors feel the impact directly through higher living expenses; leaving them with less disposable income, and thereby less discretionary spend. The knock-on impact is huge. The Fed likely will stop raising rates soon, having little real economic impact anyway.

Prepared investors should consider hard asset hedges against price increases.

Hence, hopes for the Fed resolving inflation seem unrealistic. Markets may deteriorate in 2023 from slowing growth, hurting overleveraged firms. The Fed could then reverse into easing mode.

Bracing for Global Trade and Currency Shifts

Major changes in global trade and currency usage are unfolding. This brings long-term risks to dollar dominance that investors need to prepare for.

In particular, the BRICS bloc of large emerging nations has taken concrete steps to increase trade conducted in local currencies rather than dollars. For example, recent BRICS agreements involve major oil producers like Saudi Arabia now transitioning away from petrodollar settlements. The dollar has been the global reserve currency since World War II, with the majority of international trade conducted in dollars. But with more trade settlements now bypassing the dollar, its central importance is gradually declining.

This is a long-term structural shift.

Each time countries agree to trade in local currencies rather than dollars, it reduces global dollar demand incrementally. The dollar will remain the dominant currency for years, but its influence is undeniably diminishing as alternatives grow. Patience is essential when adjusting to these monumental currency changes. However, prudent investors should begin evaluating exposure to non-dollar assets and economies. Hard assets like gold and silver in particular offer wealth preservation as currency wars intensify.

The BRICS nations and their allies are deliberately working to reduce dollar dependence, seen as giving the US too much economic leverage. The bloc plans to keep expanding membership to additional nations. As the use of alternatives like China's yuan expands for international transactions, the dollar's value could face more volatility.

Investors may wish to hedge dollar holdings and diversify currency exposure over time as relative risks shift.

The coming decades will bring a markedly multi-polar global economy, with reduced reliance on the dollar as the sole reserve currency. Investors should make gradual portfolio adjustments to match this emerging new monetary order.

Central Bank Digital Currencies Will Compromise Privacy

Central bank digital currencies (CBDCs) will emerge in the coming years, though timelines remain uncertain. Too many governments explore these to ignore the eventual reality. The Fed's FedNow settlement system could enable dollar digitization. But CBDCs allow far greater tracking of spending patterns, transactions, and money flows compared to physical cash. Without cash options, individuals would lose a significant amount of privacy and autonomy over their financial data.

China's digital yuan exemplifies the unprecedented monitoring capacities of CBDCs. The digital yuan allows the Chinese government to track all transactions in the financial system in real time. This gives them unprecedented oversight of their citizens' spending habits and financial behaviors. While other countries may not monitor CBDCs to the same extent as China, the technology still enables a questionable level of financial surveillance. Tax authorities, law enforcement, and even marketing firms would relish access to the transaction data from a CBDC.

Once governments have access to the full transaction history of every citizen, it opens the door to dangerous potential overreach and privacy violations. Cash provides an important option for financial privacy that would disappear in a fully digital financial system.

Protecting privacy requires utilizing diverse options beyond just CBDCs and bank accounts.

Investors should anticipate widespread adoption of CBDCs in the future given governments' clear interest in them. However, CBDCs pose significant risks of mass financial surveillance and loss of transaction privacy. Responsible citizens should resist overreach and demand protections for financial rights. For wealth preservation, investors should complement digital funds with offline physical holdings like precious metals. Hard asset savings held personally avoid the transparency perils of an all-digital finance future.

Gold, Silver, Copper and Energy Can Preserve Wealth

Given the mounting uncertainty across markets, what assets may help investors safeguard wealth over the long term? We recommend selective commodities and related equities.

Gold deserves particular consideration as an essential inflation and crisis hedge, as well as for its enduring role as a store of value. Silver also has a history as money and extensive industrial uses that drive demand. Copper and uranium are critical industrial metals poised to benefit from rising energy needs.

The entire energy sector also warrants investor attention. Oil, natural gas, nuclear, and renewable energy companies provide intrinsic value while powering economic activity. As essential inputs enabling growth, they can resist downturns better than most sectors. Commodities offer diversification from paper assets like stocks and bonds. Their tangible nature and daily demand create stability amidst volatility. They have demonstrated a historical capacity to preserve wealth through periods of inflation or market turmoil.

For lasting profits, investors should evaluate meaningful hard asset exposures in their portfolios beyond just stocks and bonds. A prudent mix of commodities and commodity producers enhances resilience. This can steady the overall portfolio during market stresses. Owning physical precious metals oneself or through a trusted provider is ideal for privacy and direct control. But equity stakes in commodity businesses also participate in the upside. Resources and energy stocks help compound gains from rising real asset prices.

With crisis risks escalating globally across dimensions like inflation, cybersecurity, and geopolitics, investors need proven safe-havens. Hard assets managed prudently can smooth out turbulent times ahead. Above all, holding some permanent wealth preserved in tangible form provides confidence as financial risks mount.