Go cyber or go gold – lessons from Panama

Panama had the canal and financial services protecting the world’s darkest secrets, but not any more. With 11.5 billion documents leaked in a couple of hours, 40 years of transactions laid bare for everyone to see on a normal Monday morning, secrecy is a thing of the past. It died the instant the world became digital, but also means everything can be falsified or destroyed. 

Trust and discretion, therefore, will soon return as the most sought-after commodities. Investors are really left with two very opposite approaches.

Go uber technology – invest in cybersecurity-related startups. Everyone seems to be trying to outcompete one another’s game-changing, next generation, big data, intelligence-driven silver-bullet gizmos. Some of the most promising ones being Cybereason, Digital Shadows or, my personal favourite, Hacker One.

As Amit Mital, chief technology officer at Symantec, reflected in a Forbes article last July: “Only artificially intelligent defence systems would have the ability to react instantly in real time.”

The other option is to embrace your inner contrarian and go gold – physical gold. It cannot be falsified or overproduced. Additionally it is both liquid – in terms of being able to be bought and sold easily – and movable.

Go gold and come full circle to the way the Medicis and the Rothschilds used to do business. Reinvent private banking in the purest forms of discretion, safety and trust in full decorrelation from the financial system.

So-called gold bugs have been promoting the metal and it remains vulnerable to counterparty risk and issues around storage, as well as volatility in price.

The Tocqueville Bullion Reserve is one option as it was built to protect assets and provide liquidity.  Alternatively, the Gold Series Fund also holds physical stock and uses trading methods to provide returns.

The financial system seems to be teetering, and digital warfare soaring, but both create opportunities to benefit from financial and cyber-risks.