Editor’s Note: Congratulations, America! Inflation in 2024 was finally tamed, thanks to the Federal Reserve’s deft balancing act and a “Goldilocks” economy. No overheating, no chilling, just right. In fact, the Fed even gifted Wall Street an early holiday present on December 18 by trimming interest rates another quarter point.

Ah, stability… breathe it in. Now exhale. Because here comes Trump 2.0 to bulldoze everything like it’s the set of a reality show. Below is your investment survival guide.

The president-elect has vowed to slash taxes, ramp up spending, and reimpose his signature trade war policies. These are inflationary accelerants of the highest order. Forget “America First.” This is “Inflation First.”

Let’s set the stage for 2025: Wall Street is jittery, the U.S. House is a circus with a razor-thin majority struggling to pass even basic legislation, and geopolitical tensions with Europe, Russia, and China are heating up faster than Elon Musk’s rants on X.

Billionaire Musk campaigned vigorously for Trump and spent vast sums to assist the Republican ticket. He now acts as if he’s entitled to be co-president.

Musk’s megalomania seems on a par with Bond villains. (When does Elon’s volcano lair open for tours?) Rational investors who are paying attention should be nervous.

Whether it’s his influence over social media narratives or his stated plans to upend governmental institutions, Musk’s meddling adds an unpredictable variable. His penchant for stirring the pot might feel exhilarating for his fans and the super wealthy “tech bros,” but it also undermines confidence in already fragile institutions.

The Inflation Beast: Out of the Cage

Trump’s proposed tax cuts, if enacted, would pour fiscal kerosene on an economy already adjusting to looser monetary policy. Add a new round of tariffs that could reignite global trade wars, and you have a recipe for surging consumer prices. Supply chains, which have barely recovered from the last trade skirmish, could buckle again. Remember 2022’s shipping delays and sky-high goods prices? Fun times.

Meanwhile, the Federal Reserve, enjoying its “pause” from hawkishness, might find itself backed into a corner. A reacceleration of inflation could force the Fed to hike rates or at least pause its rate cutting, sending markets into a tailspin. Goldilocks would be out the window, replaced by a bipolar bear and bull alternately trampling portfolios.

Indeed, Fed Chair Jerome Powell at his post-meeting press conference on Dec. 18 intimated that monetary policy would grow more cautious in 2025, an assertion that roiled the markets.

Chaos, Thy Name Is Washington

If inflationary pressure isn’t enough, the incoming administration promises a fresh round of political drama. The House’s fractious majority can’t agree on lunch orders, much less a coherent fiscal policy. Budget gridlock and potential government shutdowns could spook markets and erode business confidence.

On the international stage, Trump’s erratic diplomacy is likely to worsen tensions with NATO allies, while his hawkish stance against China risks derailing trade and investment flows. Russia remains a wild card, as does the Middle East, where Trump’s unconventional alliances could ignite fresh geopolitical crises.

Six Ways to Hedge Against the Madness

So, how can investors prepare for what promises to be a tumultuous 2025? Here are six suggestions:

1. Go for Gold (Literally): In times of inflation and geopolitical uncertainty, gold remains the ultimate safety net.

For specific gold investments, consider allocating to physical gold through trusted dealers or vault services like GoldMoney or APMEX. Exchange-traded funds (ETFs) like SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) offer convenient exposure to gold prices without the hassle of storage.

For those seeking leverage, consider gold mining stocks such as Newmont Corp (NYSE: NEM) or Barrick Gold (NYSE: GOLD), which tend to amplify gold’s price movements.

2. Bet on Bonds: Short-duration Treasuries could be your best friend if inflation returns and the Fed is forced to resume its hawkish stance.

3. Diversify Geographically: Consider allocating to international equities in stable economies less impacted by U.S. trade policy shenanigans. Europe may grumble about Trump, but the continent’s stocks might quietly rally.

4. Embrace Commodities: With trade wars on the horizon, agricultural and industrial commodities could benefit from supply disruptions. Think Invesco DB Agriculture Fund (DBA) or energy plays like drilling services provider Schlumberger (NYSE: SLB).

5. Venture Into Volatility: A volatility ETF like ProShares Ultra VIX Short-Term Futures ETF (UVXY) could capitalize on the chaos. It’s the investment equivalent of betting on a dumpster fire, but hey, profit is profit.

6. Consider Cryptocurrency: Conservative investors have typically disdained crypto, but since Trump’s election, crypto has been on a tear and the momentum should continue.

In the new age of chaos ahead, vigilance is key. Hedge your bets and expect the unexpected.

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John Persinos is the editorial director of Investing Daily.

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