How to get ready for financial turmoil

In the opinion piece I wrote last week, I warned of a looming financial crisis in the U.S. (and other western nations) fuelled by spiralling debt, money printing and a broken political system - and that most people will be unprepared.

- FRANK GIUSTRA

"In politics it is necessary either to betray one's country or the electorate. I prefer to betray the electorate."

Gold has outperformed stocks and bonds since 2001 and it will continue to perform, only now at an accelerated rate

Although much of the population is anxious, no one can imagine a worst-case scenario, simply because unlike my parents' generation, our generation has never experienced the effects of a depression, hyperinflation or war. The sad reality is that history has shown us that these cycles occur every 70 to 100 years and the patterns leading up to these crises are recognizable.

Unlike most individuals in the West, the rest of the world is preparing for a worst-case outcome.

The Ukraine and Gaza wars have split the global community into competing camps: the West and the East, the G7 and the BRICS Plus nations. The Global South is trying to stay neutral but increasingly, Russia and China are pulling ahead in the war for the hearts and minds of many poorer nations.

The biggest battle in this East versus West confrontation will be over the U.S. dollar's reserve status. The idea that the dollar will remain the supreme currency no matter what because "there is no alternative" (TINA) is being quickly disproven, and the U.S. is now witnessing "the ugly new alternatives" (TUNA).

Nations around the world are increasingly turning to other mechanisms to trade outside the U.S. dollar system and replacing U.S. dollar reserves with gold bullion.

So, how will a major crisis manifest itself? Firstly, as the U.S. runs out of foreign buyers for its Treasuries, the Federal Reserve will need to step in as it has in the past and become the buyer of last resort, but this time in much greater quantities. To do this it will have to print money a lot of money.