the fed isn’t worried about inflation but what if they’re wrong?

if history is our guide, inflation could make stock prices more volatile, bonds worth less, real property worth more, and precious metals considerably more valuable; we compare digital assets to precious metals in this context.

it’s worth noting the surge in inflation coincides with the largest move on record of excess cash into short-term lending facilities with the fed. basically more than $1 trillion of money market investments are parked with the central bank earning a maximum 0.05% return. upon which the monthly government figures already concede an appreciable inflation tax. investor returns on cash, net of inflation, are now -5% and falling.

socially, inflationary effects could test a fragile peace; for example, last year in chile, an 8-cent hike in public transit fares unleashed lethal street protests leading to a constitutional crisis. while this isn’t what we expect, the fed seems careful not to recall the 1970s: a time of high inflation and low growth economists call “stagflation.”

the 70’s were disastrous for stock and bond portfolios.

gold prices went up more than 20x from a low of us$35 per ounce in 1971 to us$850 in january 1980. silver price gains were even greater than that of gold, albeit with the asterisk of market manipulation by texas’ hunt family, the wealthiest on earth at the time, as they sought to corner the market.

our approach applies the latest investment process technologies upon an asset allocation model dating to the ‘age of enlightenment.’ the fed may be on the right path but we never gamble with client resources. intellectually, we’re agnostic. our asset allocation is built to endure all eventualities.

in our typical portfolios, we invest 50% in real estate and precious metals. the remaining 50% is in stocks and treasuries. our portfolios are designed to be robust and anti-fragile.

the bottom line is: we're prepared.

in environments like the 1970s, returns from our construction leaves almost every investor in the dust -and with less volatility. we think it pays to be unorthodox, independent and data-driven.