This past year has highlighted three truths, and one golden opportunity, when it comes to technology.
Firstly, investment in tech is capable of driving massively outsized returns for investors. Secondly, these technologies now proliferate across every single industry globally. And thirdly, we are only just seeing the tip of the iceberg when it comes to the rise and rise of the tech platform strategy, with its ability to transform whole industries and create entirely new global markets.
Take this third point. The most visible recent example is the transformation of the somewhat ho-hum area of consumer credit by BNPL marketplaces like Afterpay and Zip Co.
These new technology megastars have managed to make this vanilla product sexy again, and in the process have created global household names and huge value for shareholders.
But marketplaces are only a subset of the broader ‘platform’ strategy which, for example, is the difference between the Amazon marketplace (where we go to buy products from hundreds of merchants), and Amazon Web Services (the platform that powers many more thousands of businesses and their technologies).
Yes, Amazon’s marketplace has created a lot of value. But the value created by the AWS platform is substantially greater for Amazon, its shareholders, and the broader markets it services.
Which brings us to our golden opportunity.
What if we could apply this powerful platform strategy to solving one of our current most pressing economic problems, whilst simultaneously leveraging one of Australia’s greatest resources?
Monetary policy is nearing a dead end
Our national economy has been brought to its knees by the COVID lockdown: no growth, rising unemployment, and a population with declining wealth and increasing debt, who have been forced (and encouraged!) to tap into their super to make ends meet.
This is partly because, when the pandemic descended, the world was already fast approaching an impossible position when it came to monetary policy’s ability to stimulate economies.
Interest rates were already trending into negative territory, depreciating national currencies, and making citizens poorer as the value of their AUD savings and yield dropped away.
Global governments then chose to create additional economic stimulus with the arrival of COVID, and they sold bonds and increased government debt to fund it. Central banks were then compelled to print more money in order to buy those bonds.
As a result, future generations are now burdened with paying back this debt in taxes for decades to come. We also face the risk of hyperinflation and a massive correction if interest rates go back up again.
The golden opportunity
When it comes to a tech-driven solution, not all marketplaces or platforms are created equal.
As an example, in the case of BNPLs, one might argue we are propping up the economy via retail sales driven by increasing consumer debt, at a time when borrowers may no longer have jobs.
This is not a long-term solution.
Instead, we can apply technology platforms in a way that leverages known sources of long-term wealth for our citizens, sovereign institutions, and broader economy.
One such source of long-term prosperity, and arguably one of the world’s oldest and most renowned stores of value, is gold.
As JP Morgan once famously stated: “Money is gold, everything else is credit”. And after many decades of opinions to the contrary, world-renowned value investor Warren Buffet has also recently dumped his bank stocks and moved heavily into gold.
In fact, over the past three years, governments around the world have been stockpiling gold at record levels, knowing that gold ownership contributes to the strength of a nation.
Global governments, that is, except our own.
And when you consider that Australia is set to overtake China to become the world’s largest gold producer in 2021, this policy becomes even more puzzling.
Despite our leading position in the production of this rare and valuable asset, we don’t even sit in the top 20 countries in the world in terms of gold ownership. And yet gold bullion is our number three export earner, shipped in spades offshore at bargain-basement wholesale prices.
But if applied correctly, a platform-based solution could be key to using this immensely valuable Aussie asset to restimulate the economy, strengthen our national finances, and help our citizens shore up their individual wealth.
The golden platform
There is common rhetoric amongst the technorati that we should “stop digging rocks out of the ground” and instead focus on intellectual property manifested in software.
But I propose that it is precisely the combination of these two worlds – our most valuable natural resource and new-school platform technology – that creates our greatest opportunity.
By marrying these two national strengths, we could be setting up Australia to become a global economic powerhouse for many years to come, as investors seek financial strength and certainty instead of ever-mounting piles of debt.
Sovereign governments and individual citizens around the world have already flocked to the reliability of gold. It is past time for us to make that move too.
We’ve been escalating the national conversation about sovereign manufacturing capacity.
Let’s not miss the opportunity to build a national brand as the world leader with our greatest natural resource too.