Have you ever thought about what happened when the most conservative money in the world began to flee like crazy?

Today we are going to talk about a topic that many people are reluctant to face: how to protect wealth in war and turmoil. This is not alarmist, but a question that every person with assets should think deeply about.

## Why didn't the buried treasures save them?

Let me tell you a story first. During the Cultural Revolution, there was a collector in Shanghai who saw the situation change and quickly buried all the precious porcelain in his home in the backyard. He thought that it was hard assets anyway, and it was better to bury them than to have the house confiscated.

What was the result? The Red Guards still found it, and the porcelain was broken all over the floor. What’s worse is that this collector was criticized for “hiding feudal cultural relics” and his family was destroyed.

But at the same time, another family made a different choice. The father of this family was an intellectual. Although he was also persecuted, he secretly taught his children mathematics, foreign languages, and philosophy at home. He told his children: "The house can be raided, the money can be confiscated, but no one can take away the knowledge and character in your mind."

Thirty years later, guess what the result was? The first family completely fell into decline, while the descendants of the second family, some became scholars, and some went abroad to recreate wealth.

This is the first insight I want to share with you today: **The highest form of wealth is not gold and real estate, but the inheritance of intangible capital. **

## Do you think gold is a safe haven? History tells you the truth

Many financial advisors will tell you that buying gold and real estate are "hard assets" that can resist inflation and maintain value. But what they don't tell you is that these assets are only "hard" under the framework of a stable rule of law.

When the political system collapses or becomes authoritarian, your "hard assets" may become your "target". Why? Because they are too conspicuous!

During the Cultural Revolution, 250,000 households in Shanghai alone were searched. The Red Guards specifically looked for "four types of elements" who had houses and land. No matter how deep your gold bars are hidden or how strictly you collect the house deeds, you will eventually not escape the search.

This reminds me of a modern example. After the outbreak of the Russo-Ukrainian war in 2022, Western countries directly froze the overseas assets of Russian oligarchs. Billions of dollars of luxury homes, yachts, and artworks turned into waste paper overnight.

Therefore, hard assets are not "hard" in all situations. **The nature of the crisis determines the effectiveness of the hedging strategy. **

## Hong Kong's financial defense war: the government defended the exchange rate, but your stocks still fell in half

In the 1997 Asian financial crisis, Hong Kong taught us a wonderful lesson.

At that time, international speculators used the "double strike" tactic: shorting the Hong Kong dollar on one side and shorting Hong Kong stocks on the other. Their logic was to force the Hong Kong government to either maintain the exchange rate or the stock market, and neither could be maintained.

How did the Hong Kong government fight back? Directly use 80 billion US dollars of foreign exchange reserves to raise the overnight lending rate to 280%! Want to short the Hong Kong dollar? Sure, the borrowing cost is so high that you will go bankrupt. At the same time, the government directly entered the market to buy stocks, squeezing out the speculators.

Final result: The Hong Kong dollar was saved and the financial system was stable. Sounds successful, right?

But what about individual investors? The Hang Seng Index still fell by 60%, housing prices were cut in half, and GDP shrank by 5.5%.