The EU, Japan and the US are struggling to keep their economies going, and are resorting to 'quantitative easing' in order to support economic demand. The Fed is sure to engage in further currency debasement in order to keep employment under the psychologically important 10% level. The private sector added 65,000 jobs, however this was offset by a more bearish loss of 160,000 jobs from the public sector, for a net loss of 95,000 in the last reporting month.
Expect the Eurozone and Japan to debase their currencies by even more in order to prop up their currencies. People are talking about a new currency system. This is a side-show to the real issue. A new style of governance. The gross mal-administration of government - clearly depicted in spades, hearts, clubs and diamonds - shows how pathetic politicians are. They did not earn their way into these jobs. There is no credible reason why you would give a politician who has administered a household budget control of 3-50% of your local economy, depending on if you are European or liberal Western.
The reality is that we are living in a period of pseudo-liberty. You never really had any freedom. Governments gave you political rights because they had you by the balls. Every time they needed money...they squeezed your testicles. If you had more money, then they came in the back door. So, the question is....how to protect your money.
Clearly gold and other precious metals are the order of the day. Historically, gold has always risen to a peak value which relates to a Dow Jones Index value / Gold price of 4-5x. That ratio, at the current Dow Index of 11,100 points, equates to a peak value of $2775/oz. Of course if the Fed engages in more quantitative easing, then the Dow could well go higher, and then gold could go higher. Of course you don't want to place all your money in gold.
Another appealing area is the commodity and emerging markets. Australia and NZ are safe, strong economies, but their property markets are priced high. Unless you are looking at cheap rural properties, you are better off investing in emerging Asian markets like the Philippines. It offers the best yields in Asia after Indonesia, except that there is far less prospect of Muslim extremism (Muslims are largely confined to the southern island, and extremist activism has declined). In addition, visa restrictions and language barriers in Indonesia makes the Philippines far more attractive. We already bought property in Lipa City, a satellite city between Manila and Batangas with 3 shopping malls and a particularly cool climate.
It is a personal decision - where to place your money. Personally, I like to spread it around for lifestyle reasons, even if that means having 3 mountain bikes, 3 washing machines. I might mention that you can buy white goods for a third of the cost as Australia in the Philippines, and its the same for comparable furniture. I like the low cost, beauty, high yields and culture of Japan. I like the easy of living, the relatively good 8% yields and fun of the Philippines, and I like the cool temperate climate of Australia/NZ. All of these places are good for reasons. In Australia, I'd buy gold stocks, mainly explorers in Africa and PNG. See my
Specs blog.
I bought a home base in Japan for $US28000 (just 1hr from Tokyo), an investment property offering 13% yield for $US38,000. In rural areas, they are as little as $10,000. i.e. $10,000 outside Nagano City, which is an international airport and ski resort area. In the Philippines we bought foreclosed land lots in a failed subdivision in Lipa City, strategically located close to a planned school, opposite a community garden destined to become a high-class residential precinct, close to the main highway. In NZ, we bought a summer house in a rural area because the currency was only 0.50-0.55 to the USD, so it was a lifestyle decision and currency play. NZ is not growing much, however in 10-15 years it will have an energy boom. When a 4 million person economy finds oil & gas, it makes a big impact. So NZ will not always be the poor Western cousin of the OECD. In this commodities/energy boom, people will start finding energy resources.
