The Gold has been doing very well lately, partly due to the depreciation of dollar, partly due to the fear of inflation, and last but not least, due to speculation. I think this Yahoo Tech-ticker interview explained why I don’t like Gold as long term investments very well. More importantly, it suggested alternative investments for gold.
With the Lehman Brothers discussion underway in its 3rd day, and Asian market is anxious waiting for positive outcome. I am thinking otherwise. Regardless Lehman gets sold (as a piece or in several pieces), continue its business with bankrupcy in mind, this Lehman thing is just a tip of iceberger we are going to see. What? You may ask we already see Bear Stearns, Fannie and Freddie bailout, and that’s only the tip of iceberger? The problem is not only AIG, WaMu: the next two in the line; the problem is now I am afraid the dollar and the world financial market will collapse.
As we have seen from the difficulty of Lehman discussion, the key is US goverment is not going to provide any kind of finance support, as they did in the Bear, Fannie, Freddie deal (total $229 billion). For the goverment, they don’t want to do this due to two reasons: 1) Moral hazard; 2) The increasing debt on the US goverment and tax payers, and the the pressure on USD comes with it.
If the worst happens, nothing will be spared, except the gold (Wiki: ways investing in gold). Because before the 1970s un-pegging of dollar and gold happened, gold was the central banks reserve/deposit to print paper money. And if we could go back history a bit more, we know gold is the most widely used precious metal for money.
So, I am seriously thinking about the Gold ETF (GLD). Another way, if you are like my friend Sun, you can buy the gold bar from bullion direct.
I am trusting the good old gold much more than the Lehmans, the wall street, the US goverment (treasury department, the federal reserve), will you