Sunday, 25 December 2011

Is your money with Cinderella or the ugly sisters?

By Richard Holmes


You know when things are looking awful for your portfolio whether a QROPS, pension, SIPP or otherwise, when even the spoilt greenback starts to look great. Dealers refer to this as the 'Ugly Sister ' effect, and to make certain, the US Buck has been gaining in value simply as there are only a few attractive alternatives available.

The EU Buck, Yen and Sterling all appear like bad ports in this particular monetary storm.

But instead of dancing with the Ugly Sisters, we should always recall that there are some potential Cinderella's out there. Gold is one such shining light. It's always a good hedge and in periods of industrial doubt, high sovereign debt and inflation, gold can act as your portfolio insurance.

"Industrialization of China and India isn't about to come to a stand still, so needs for naturally occuring resources will carry on rising. Why then do so many people think they can actively deal with a complicated portfolio of stock and fund investments while going to the office or maintaining a home?"

If inflation gets out of hand (caused by printing a huge amount of cash) gold is the place to be. And if the world recovery returns, requirement for industrial metals and energy, particularly black gold (oil) will continue to increase.

Nevertheless, I'm not advocating simply changing your assets into gold or oil and standing by waiting for the deluge to pass.

Rather, I suspect investing in funds that invest in precious and industrial metals and energy covers all bases. Interim market turbulence aside, as I'll state continuously the mass industrialization of China and India isn't about to come to a grinding halt anytime soon. And as discussed previously, this means continual increasing demand for naturally occuring resources.

To that end, we must look at funds that invest in, say, silver and gold mining or oil services companies instead of without delay purchasing lumps of shiny stuff or barrels of sticky black liquid.





Disclaimer

Stockholders must seek professional finance guidance regarding the acceptability of making an investment in any instruments or following any investing methodologies. Nothing in this piece shall be considered a solicitation or offer to purchase or sell any security, future, option, fund or other financial instrument or to supply or provide any investment advice or service to any person in any jurisdiction.




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