It seems to me that the majority of the work on disengaging from the fate of the USA has been done - four years ago the Chinese were into the USA for close to 2 trillion, now it is 1 trillion and dropping. Europe is its own drama and Asian markets are looking locally. Granted the decline of the US dollar is not an easy one, but it is a lot less traumatic now than it would have been 4 years ago. At the very least, the wise ones have had an opportunity to shore up their savings and get out of debt. I read today (sorry lost link) that Oz savers have put away approx 60 billion in savings since 08, and SMSF's which account for around 40% of super funding, are primarily in cash - having seen the writing on the wall. All that coupled with Oz being in a fairly strong position (again) for economic turbulence bodes well for Oz overall. The wildcard is the property market/bubble, and given the Australian love of housing 'investment', dropping interest rates (we're lucky, we CAN actually reduce interest rates to stimulate the economy) may lead to a discomforting stagnation for a few years, rather than an all out USA style market crash. Personally I'm fairly 'bullish' on Australia overall. In one scenario, I can see Oz integrating with Asia in a meaningful way, with all that entails - linked prosperity for the next 20 years etc. The wildcard is China, but I'd much rather be hooked into China's fortunes than USA or Europe. We all know what is going to happen. The only issue is how fast.
Well I was wrong! With both Gold and Silver heading up is this the signal we have all been waiting for where "money" is finally being seen as what it really is? Is FIAT finally getting the status it always deserved? = junk?
Could gold go through Jim Sinclairs 'breakout' level of $1764 today - would be interesting to see if his predictions come true!
Gold/Silver/Platinum won't reach their true value unless fund managers change their opinions on metals. Wholesale fund managers avoid precious metals in their portfolios and its generally fringe and private investors that buy the stuff. Fund managers represent the bulk of world investment decision makers. Fund managers claim that metals arent worthy investments as they dont "do" anything - much the same line as Bernanke and Co tow but the real reason is.....fees. Typically a MER (Management Expense Ratio) on a managed fund is anywhere from 1-3% of the fund balance, regardless of how the fund performs. This can be justified in the stock market because the fund managers claim they know which shares to buy and when, can properly balance the portfolio etc. Even on cash investments they will still charge a MER of 0.5% or so because they claim they can access better cash rates. But you find me one managed fund that gets a cash return better than about 4% when as a retail investor you can get 6.5% at call or 7%+ term deposits. So when it comes to metals, the fund managers cannot justify a MER. They cannot but the gold cheaper or sell it at a higher price than the average person and they cannot claim to have special knowledge of the market as there is only 1 asset ! Its like a fund manager trying to charge you a fee to buy BHP shares and "manage" it for you - why would you take up their offer when you can just buy BHP yourself??! Its not until fund managers can find some way to get the cream off the top of precious metals investing that they will then enter the domain of the really big money.
I notice "forex" is the new area being plugged heavily for the mug punters to get into, cfd's look to be out of favour!
