Dollar is Down – China Rises Up
The New Gold Rush: Dollar is Down
– China Rises Up
Investors are rushing into gold and driving down the U.S. dollar. For the first time since the height of the banking crisis, the value of an ounce of gold has topped the psychologically significant ceiling of $1,000.
Why the stampede? Investors are losing confidence in the dollar as the US government cranks up the printing presses to pay for its skyrocketing debt. The dropping value of the dollar is a bet that the greenback will lose even more value as more dollars enter circulation and an inflationary spiral results.
Gold received an extra boost after a United Nations panel’s report criticized the U.S. dollar’s position as the global reserve currency. Tuesday’s gold prices crossed an important threshold, but bullion has been on the rise for months. It’s warning of continuing trouble for US dollar-denominated investments.
What’s an investor to do? One word: diversify. That’s what gold bugs are doing.
Chinese authorities are upping their gold reserves and investing in other currencies as well as in an international currency instrument from the IMF called Special Drawing Rights or SDRs.
Some pundits recommend investing in commodities such as oil, natural gas and other metals. Investing in fast-growing Chinese companies is another way of diversifying away from the dollar. Commodities have had a good run since their lows during the financial crisis but their future is unpredictable in a wobbly world economy.
We do know that China continues to be the fastest growing major economy in the world. That’s why we continue to suggest that investors place a carefully chosen portion of their portfolio in the safest companies in the high growth Chinese economic environment. Inflation may eat away at the dollar in future, but Chinese investments have already felt the effects of America’s economic malaise and our model portfolio continues to show significant gains.
For investors who chose to retain a portion of their portfolio in US stocks, we recommend companies that managed to retain or increases their dividends through the financial crisis. Many of these are resource stocks, and they should act as a hedge against future inflation. You can access our secure dividend paying portfolio through our website at the Dividend Genius.
Gold’s rise is a signal that investors should definitely not ignore. It’s time to diversify if you haven’t already done so. Consider diversification through our model portfolios at the China Stock Digest and the Dividend Genius.
We recommend that you take steps now to avoid being caught in a trap between a declining dollar and spiraling inflation.
IT’S NOT TOO LATE!
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Committed To Your Profits From China,
Jim Trippon,
Editor
China Stock Digest & Dividend Genius
