Keystone Financial Australia Market Updates MARKET UPDATE 6/6/16

Keystone Financial January 2016 Finance Market Update This was originally posted at Keystone Financial Blog: http://www.keystonefinancial.com.au/marketupdate-1216/. Receive updates and tips from us! Subscribe to our newsletter at [email protected]. The week ending January 29, 2016 capped a wild ride on markets. The Biggest news/event was that the Japanese Central Bank has moved to make interest rates NEGATIVE in that country. I can already hear you asking how that works and what the heck it means! Well, it simply means that the Central Bank is going to effectively CHARGE people for having money on deposit with a bank. That my friends is CRAZY and is anathema to what a bank should be doing for it’s customers. So the poor savers in Japan, who already get sweet bugger all in interest on their money now have to PAY to have it on deposit. Is the world going insane? Why would the Central Bank do this? The answer is simple and will probably shock you: They are trying to get people to go out and SPEND their cash to help grow the economy in Japan. To think that this is the solution to Japan’s 20+ years of Deflation is utter lunacy. Spending DOES NOT promote strong economic growth. Only manufacturing and Producing Stuff ads to a nations wealth. Man, it gets my blood pressure up! This is also going on in EUROPE at the moment as well. As I’ve said in previous posts, we are in a currency war and this latest shot by Japan WILL get a response from other countries (most likely China). All currencies (which have ZERO intrinsic value because they are backed by nothing) will go to Zero by the end of this currency war. Could this happen in AUS? Possibly, BUT we currently have just over 2% inflation (probably much higher) so I can’t see it on the horizon. But currency valuation is a relative game so our central bank may have to keep rates low just to keep our currency low relative to others. This promotes export and of course tourism (two big contributors to our economic growth). So how do you protect yourself against these Central Bank shenanigans? Own REAL assets (property, metals, diamonds, shares) un-leveraged if possible. These assets tend to be a hedge against devaluing currency (and inflation). But many of you know that already if you are being advised by Keystone Financial.