Euros? Gold? What should we do?

[Bleacher Creature]

We knew better on November 2nd when we didn't vote for the Chimpster, but now we have to face the consequences of other people's stupid decisions.

I'm not a tin foil wearing type of person, but I'm also not an economic whiz. So what do we do if and when this so called "economic Armageddon" hits??? And at the risk of sounding stupid, how do you buy Euros or gold? Do you buy European mutual funds, or do you actually buy a stack of real Euros??

[Lucky Luciano]

1. You could open a bank account in Europe.

I don't know how much you have, but it is always good to spread it around. Put some in Britain and some in Europe for a little diversificiation. European mutual funds would be good if the European economy were good, but it is very stagnant right now. Germany has been in a really bad recession - partly because of the strength of the Euro - the imports are too expensive here and people will not buy European imports as much. If you have some comfor with the weak economic outlook of Europe (The strong Euro actually hurts them) then the mutual fund is good. For example, if you had bought into a mutual fund at the beginning of our Emporer's reign and the stocks in the fund went down by 25% in Euros, then you would still be up significantly in dollar terms because the Euro has gone up about 50% since 2001.

If you have a lot of money, then people often hedge their currency risks by investing in futures or options against the dollar. Soros and Buffet made very large bets a couple years ago against the dollar. Futures and options have a lot of leverage - they probably made a couple billion each. They did this as speculators, but the other reason for futures and options (the real reason) is because they can act like an insurance vehicle for you (but you kind of need to be rich for them to be useful).

[liberalequestrian]

13. Question about the recession in Germany

Hope you can answer this. I'm looking to go over in January, was advised that I would not be able to buy much with my money because the euro was so strong, but if they are in a recession, would that even things out?

[Kellanved]

19. Germany is not in recession

Coming out of stagnation; the economic indicators are pretty far up. The weak Dollar is a problem, but it also makes raw materials cheaper and most trading is done within the EU.

[amazona]

34. i'm going in february

No, it doesn't look like it will "even things out." The weak dollar is just going to make the trip more expensive than it needs to be. Thanks, Gee Dubya! :-(

Air fares are good though so that should take some of the pain out of it.

Do you ski?

[burrowowl]

2. Gold you can keep on you or

in a safe place. The U$ allows you to buy one $5 goldpiece a month. You should have started earlier.

[Lucky Luciano]

3. There is a stock ticker symbol that represents

1/10 of an ounce of gold. You buy them like shares...so 10 shares is one ounce of gold. Gold has gone up a lot lately, so I do agree about having started earlier, but it might still be good to have a little gold, but everything in gold would be very foolish.

[burrowowl]

6. I meant like in war depression

you should have some real gold on you, not a piece of paper saying you have some.

[Steven_S]

5. Hadn't heard that one.....

about buying in those increments. "They" were allowing me to buy substantially more. I must be lucky.

[Joy Anne]

8. me too

I have gold coins, bought all at the same time long ago, and gold stocks, but they're just a bit of diversification. Coins don't pay interest or dividends. Some of my mutual funds have foreign stocks, but I honestly don't know how that affects euro v. dollar.

[eallen]

4. Everbank offers foreign currency CDs.

They have CDs in currencies from the Euro to the New Zealand dollar. Some of these even pay reasonable interest rates. For example, the three month Australian dollar CD pays 3.25%. Of course, that could be wiped out if the US dollar rises. Currency speculation is a risky business. Diversify.

[newyawker99]

28. Hi eallen!!

Welcome to DU!! :toast:

[JanMichael]

7. Be calm. Get advise from someone you trust.

Preferably not from a post on a message board.

Then get you shit in order and: Learn to live clean, simple, and inexpensively.

[mmonk]

9. Might I suggest as a possibility,

Oppenheimer International Bond Funds. US exposure is around 17%, foreign bond exposure around 84%, and foreign currencies make up the rest. The fund is rated 5 stars by Standard & Poors and Morningstar.

[Name removed]

10. Deleted message

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[crispini]

12. Bad idea.

Depending on the market, housing is in a biiiiig bubble, i.e. too high and due for a correction.

Very regional... YMMV.

[Name removed]

21. Deleted message

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[mmonk]

22. There exits a possibilty of a real estate bubble

such as the 80's but should recover. It depends on if a credit crisis develops. Gold like other things is given to speculative runups. If one buys towards the end of the speculative runups, they stand to lose money. The same with currency exchanges. The administration isn't for propping up the dollar because they want the "market" to handle it. The fate of the dollar lies with foreign central banks which won't allow but so much pain for their own people or manufacturers. Of course the risk the US is running is the replacement of the dollar as a trade currency standard. Since no one knows the future, it is best to watch things and seek expert advice (agree a public forum board is not the best place). I too am into real estate (broker and landlord).

[Name removed]

23. Deleted message

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[mmonk]

24. Real estate is great in the long term

and so are financial markets. As far as "market" goes, I was referring to the dollar. We could have a firmer economy without large debt and trade deficits. The "market" could say "collapse".

[Name removed]

25. Deleted message

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[mmonk]

26. Unless

your debit card has a withdrawel limit or transaction limit. It's quite risky these days. It's hard to judge when to use it or not. I guess we have to live with some risk.

[crispini]

27. Did you even read what I said?

I didn't say shit about investing in Euros or gold. I pointed out, "Depending on the market, housing is in a biiiiig bubble.... Very regional... YMMV."

We have no idea where this poster lives. You made a blanket recommendation "Real Estate is great!" which is pretty foolish, IMO.

A friend of mine just purchased a home in an EXTREMELY overvalued CA city. To do so she had to get TWO adjustable rate mortagages, is now paying 50% of her take home in housing costs, and if interest rates go up, she's basically screwed.

Real estate? Yes. Stupid? Also yes.

[The Whiskey Priest]

11. You have gold and I have a bayonet

Who will prevail?

[kostya]

16. With a little gold I can get some hired guns to take care of your bayonet

Nothing personal! ;)

[greatauntoftriplets]

36. I have a vintage Louisville slugger.

How is that?

[YankeeFan]

14. Swiss Francs

Are you getting to be a Capitalist?

I’ve been watching the Dollar slowly lose its worth versus the Euro lately, and I have this sudden idea that the Bush Leaguer is intentionally making the Dollar worth less on the world market.

The idea goes like this for those who slept through Business 101, or skipped any TV Documentaries.
IF the value of the Dollar goes down, the price of American goods will go Down overseas. This means that the Europeans can buy more of American goods than their own goods (which are subject to what is known as a Value Added Tax throughout their manufacture). They buy more and more American goods and services. This means more American jobs.
Look of Balance of Trade for more information on this.

It can also be argued that he is also getting revenge on Europe for not helping us in Iraq.

[Mist]

31. Even if our exported goods can be bought more cheaply by Europeans

that doesn't mean they'll buy. There's a growing movement in several European countries to boycott American imports.

[theearthisround]

15. Surviving "economic armageddon"

To survive the "economic armageddon" transfer the majority of your paper notes into hard assets like silver and gold. I recommend reading the latest newsletters from Bob Chapman at www.theinternationalforecaster.com for a clearer picture of the coming "economic armageddon".

http://www.theinternationalforecaster.com/trainwreck.php?Id=54&PHPSESSID=2eceab5ace57f911dc15a155eab4e003

[kostya]

17. goldmoney.com

[theearthisround]

18. libertydollar.org as well (silver backed)

[newyawker99]

29. Hi theearthisround!!

Welcome to DU!! :toast:

[Fleshdancer]

20. The first step is to pay off personal debt

Sounds like debt is going to be the real killer for many American families. First there was the Economic Armageddon article and then today on NPR some economist was urging people to not rely so heavily on credit cards and to pay the cards off completely if possible. Makes me sad to think of all the credit card purchases happening right now. I also wonder what will happen to the credit card companies if shit hits the fan and suddenly 50% or more can't pay back their balances.

My husband and I are talking about gold and we're doing are best with "safe" investments but I don't know if there really is such a thing if we're looking at a possible depression. I read that many investors were pulling out of the American market and investing in China since their economy is on the rise. China is pumping a good amount of money in biotechnology R&D right now that looks promising.

I don't know. Pay off your debts and try to think of a place you could go to plant a garden for food. Better than nothing I guess.

[fluffernutter]

30. i agree with you.

[amazona]

35. this is a good post

I agree with GloriaSmith.

I have never had any reason to be glad about the investments I made in precious metals, and that is the understatement of the century. It's nice that they're up a bit now, but when you look at what they did over 20 years, I am way behind on those investments.

Paying off debt can be your best investment. A debt-free home means you have a secure base of operations even if your paper dollars or metal coins don't do too much. Less debt means you need less money just to keep the ball rolling.

[banana republican]

32. I would suggest the following:

1) Find some you can trust; a financial planner, CPa, attorney, economist.; these are the first that come to mind.

2) diverisfy you holdings. the general fule of thumb is that if you are 45; 45% of your holding should be in bonds or other LOW risk investments. If you are 25; 25% should be in LOW risk investments. If you are young you have a longer period of time to recover than if you are an old fart like I am.

3) This last week I transfered some of the money invested in HIGH risk investments (Stocks and equity) into an international fund that is indexed to Morgan Stanleys Europe Asia and Far East index. This is a mutual fund comprised of European Asian and Far Eastern Investments. 

4) During times of high inflation you will generally want to have your money in tangable property such as gold; realestate; or foreign property. These are good investments; HOWEVER; in the case of gold if inflation fails to reach significant levels you will be left with little or no return for the next 4 years. If you want to invest in gold do it but I would not suggest anything more than 5% or 10%. Make sure that you have possession of the gold e.g. Maple Leafs or Kruggerands there have been times when people have sold their gold to more than one investor.

5) Try not to be too parinoid. If the dollar craps out everyone is going to be in the same boat, and voting democrat....

[Squeech]

33. I think gold is silly

Consider what sort of economic collapse would mean sellers would no longer accept dollars for food and other necessities, but would still accept Krugerrands. That would be one really specific market failure.

Moreover, you're not going to need (or probably be able to store) one ounce of gold's worth of groceries at one time.

This doesn't mean I know what to do. I'll tell you what I'm doing now is putting my 401k contributions in a diversified *international* stock mutual fund. But to say so is to imply that I think there will still be a stock market in America in 20 years, and a banking system, and a dollar economy.

If I had serious investment capital, I would buy a failed small farm somewhere and erect a thousand wind turbines on it, and sell power back to the grid (it's legal in Massachusetts). And I'd also buy small arms, both for personal protection and for barter.

I also think it's a waste of time asking a financial advisor. All their training is based on the status quo. Their idea of an economic crisis is like the savings and loan collapse of the '80s, and they all probably made out like bandits.