Speaker for the Living

22May/090

Keep your assets in anything but dollar?

This guy Peter Schiff says a lot of things that makes sense, but I am not sure if there's anything else that can be considered more stable than the dollar (except for gold or silver, of course, but more on that later). Most currencies are compared to the dollar—some, like the Chinese money, are even pegged to the dollar. If something real catastrophic happens to the dollar (so that usual mechanisms that counter inflation, such as increased savings interest rate, cannot cope), whose money is more trustworthy?

I am happy enough to invest in other country's (such as China and other third world countries) economy—that's where more growing can happen and that's where a lot of funds are going. But if I had to put my trust in a country's government (which is what I am doing when I put my trust in a currency, since all currency is now fiat currency), there is no government I would trust more than the government of U.S.A. (I don't trust it very much, but I trust other governments even less).

As for keeping one's money in gold or silver, well, I don't think it can be more than hedging one's bet—i.e. it can't be your sole item in your portfolio. Your money may be protected against inflation, but your money is doing absolutely nothing. You will be, very precisely, the lazy servant who couldn't even put the master's money in a bank so that he can collect interest. And as for having a company keep the gold or silver for you, well, if the situation for which you are preparing ever arises ... I am not sure if there'd be any company, in any country, that can be trusted.

In a way, I guess I am in a happy position of having nothing to invest at the moment (some extra cash that I have I should keep so that I don't have to worry about how soon I'll be getting my travel reimbursements). But in a few months to a year when that won't be the case any more ... well. I'll cross that bridge when I come to it.

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