The RBA Menace to Your Wealth

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Hear that shrieking noise? That’s the girl on the front desk. There are so many orders pouring in for Shae Russell’s ‘Golden USB’ that the poor thing just realised she has to organise it all.

Why the mad rush? Well, where else can you get hours of analysis from the world’s leading gold experts and industry players?

That also includes Shae’s latest take on the Aussie gold market and the miners to be picking up while the price consolidates.

Why would you care about gold right now? One reason is to protect yourself against the Reserve Bank’s deliberate policy of trying to get the Aussie dollar down.

They like to tell us that this makes the Australian economy more ‘competitive’. They leave off the fact that they are diminishing our standard of living at the same time.

You don’t have to take my word on this…

Last week the Aussie governor of the reserve bank admitted that ‘Quantitative Easing’ is on the table as a possible policy should circumstance dictate it.

China’s central bank chief just ruled it out with a fairly pointed comment.

Reuters quotes him as saying, ‘We should not let the money held by the Chinese people become worthless…’.

A lower Aussie dollar means we can buy less in the international market.

Why, again, is this a good thing?

Wouldn’t it make more sense for the Aussie government, industry and reserve bank to work together and build up Australian innovation and investment rather than try and fiddle with the currency?

Of course it would. But Australia’s parliament is decidedly lacking in men and women of foresight and strategic planning. It’s been that way for a very long time.

$200,000 for every man, woman and child…

I can say that with a lot of confidence having just finished a book called Trillion Dollar Baby by a man called Paul Cleary. I’m thinking of doing a podcast with him.

It’s about how the Norwegians built the biggest sovereign wealth fund in the world. Yep — little Norway with five mln people has US$1 trillion in savings1.

That’s three time its annual GDP, or $200,000 for every man, woman and child in the place.

Are Norwegians blessed with some special skill? No. They do, however, have a stonking amount of oil. A lot of other places do, too.

The difference with Norway is the country demands a huge share of the economic rents from a resource that is non-renewable and sovereign to the country.

The Norwegians have now built a staggering legacy for future generations from the country’s mineral wealth.

And what do we see here in Australia? Check out what this analyst says from the Institute for Energy Economics and Financial Analysis.

Most countries in the world get significant taxation and royalties from their non-renewable oil and gas wealth. Given its large size, Australia does not,’ Mr Robertson said.

Most countries view taxation and royalties as a nation’s sovereign right to impose on any industry. Australia does not.

And many countries divert a portion of their oil and gas royalties to a sovereign wealth fund to supply future national needs. Australia, again inexplicably, does not do this.

For an example of this in action, Australia will apparently export $195 billion of LNG and LPG from Darwin to Japan over 30 years. The taxpayers of Australia will get zero from this.

Instead we have Australia’s idiotic tax system of income, sales and company taxes that crush incentives, stifle the consumer and distort the economy in a myriad of different ways.

Oh, and unlike Norway, $1 trillion in debt instead of savings.

Take the future in your own hands

Look at the mineral wealth of this country. It’s beyond belief we don’t have the equivalent of the Norwegian fund. And, no, the Future Fund is not the same.

Australia’s political class of losers and no hopers leave it up to us as individuals to take care of our families.

You can at least grab a share of Australia’s natural blessings via the share market and the firms that work in this industry.

The good news is that the Aussie gold industry is returning to where it belongs: in the hands of Australians! The Australian reports that Aussie gold companies now control 60% of the nation’s gold output.

Even better, they are delivering ‘bumper returns’ for shareholders.

Cheers,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

1 ‘Norway Wealth Fund…’, Reuters, December 2, 2019.