I think I went over this with you before... but in case I didnt. Maybe I'll post this later as well.
Try to diversify. I would NEVER put ALL of your money in Gold... thats just too dangerous. Gold can halve its value in the blink of an eye. (Yes, it can double too, but its VERY volatile).
I wouldnt put more than 30% of your savings in it... and even that is quite a bit. You might want to consider Gold-mining companies.
I would split the remainder into physical cash, possibly a few CD's.
You might even look into a Chinese ETF (Exchange traded Fund) index. There are a few that have very low fees.
Finally... if you think everything is going to go back to normal pretty soon.. .then obviously the stock market is a good investment. PERSONALLY... I think its not even close to the bottom right now..... but that is merely a guess based upon what I think will happen over the next year.
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There are different scenarios that could happen, where it WOULD be smart to have Gold. Here they are:
1) Obama could return to the policies of Carter/Volkner (Id give this a 25% probabillity, Obama idolizes Volkner) (IE stagflation)
Under the Volcker Fed in the late ’70s and early ’80s. Instead of crushing inflation, they pumped it up. Instead of bringing on the recession...they tried to hold it off. This caused stagflation... which alwasy makes things worse. Japan tried to do this as well for a short while, and they found it just kept them in their recession and pushed off their reckoning a bit.
In this case... Your physical cash loses its value... and you'd want to reduce this portion. However, Your CD's (Assuming they are diversified, lattered) would have to adjust to this new inflation... otherwise, NO ONE will put their money in these CD's. HOWEVER... you STILL will probably be LOSING value on your CD's. (When this happened in the late 70's early 80's Bonds, Bills, etc, HAD to pay out double digit interest rates in the short term... OTHERWISE NO ONE would buy them.
Gold or those Chinese ETF's would be the best bet in this type of situation... but again... Gold will STILL have the risk to plummet... even in this situation so you STILL dont want to put ALL of your money in it.
Or if you want to gamble... you can try to buy a long-term bond... and assume that everything will get better really soon... and you will be like those lucky investors in the mid 80's who had 12% interest paying bonds for long periods of time.
2) Our Banks could start collapsing on a massive scale. (Id give this a 5% probability and it wouldnt happend until 2011 at the earliest) (IE deflationary spiral)
Obama instituting stagflation can increase this risk. Inflation along with absurdly high debt levels may push China to start dumping our Debt, and removing its peg with the US dollar altogether in order to protect itself... at this point... we will essentially become insolvant... (Like Argentina). (China has already started warning us NOT to make their holdings anymore risky)
This will cause a bank panic that Obama will find it IMPOSSIBLE to bailout. Even if the fed continues to pump MASSIVE amounts of cash (Which it will), it WONT be able to stop this... only postpone it a few months or weeks. Americans will frantically try to get their money out of the banks. When the dust settles... our money supply will completely collapse and we will be bankrupt with NO possibillity of anyone bailing out our banks.
with this scenario... Gold is a good investment... HOWEVER at the end of it all... we will be in a depression that could last DECADES!!!! So I would also suggest Ammunition and even non-perishable food.
(I would let you guys all know if I saw definite warning signs that this could happen)
Topic: paper money worthless? (Read 5763 times)