Today David Walker, comptroller general of the Government Accountability Office (GAO), a person who had openly informed us about situation of America's balance sheet, has resigned from his post. This fact is already called “The ultimate sell signal” and for those of us having savings in US Dollars a question arises: What should I do to minimize the losses? I've tried to put some short info on 3 best ways to come out with profit from coming disaster.
Invest in Euro
5 years ago you would get 925 Euro for $1000, Today this amount went down to 675 EUR only, so if you would convert $1000 to Euro 5 years ago, you would get $1370 today, a 37% profit. This can sound moderate, but much more than you would get just keeping your money in the bank. The downside of it is that fact, that Europe is being weakened by US politics and this can cause a domino effect in most world currencies after dollar collapse, as the US economy is still the biggest and other countries heavily rely on it.
Invest in Gold
Once again, let's stay at 5 years frame. In 2003 for $1000 You could by 2.79 ounces of Gold at 358 USD/oz. Today you would sell it for $2639. This would give you 164% profit over the last 5 years. What will happen with Gold if Dollar collapses? Will it maintain it's value?
Here is a link to a video with good overview of Gold benefits.
Invest in International Stock Markets
I will take Vanguard Total International Stock Index Fund (VGTSX) as reference and same dates: 25th Feb 2003 and 25th Feb 2008. In 2003 the price was 7.17 and today is 18.47, so for $1000 invested 5 years ago you would get $2576 today. This would give us 157% profit and diversification of investment, as the fund consists of 3 following funds: Vanguard European Stock Index Fund (55.2%) Vanguard Pacific Stock Index Fund (24.7%) and Vanguard Emerging Markets Stock Index Fund (20.1%). As you can see, your money would be distributed around the globe, but again: in case of dollar collapse what will happen with other economies? Same question arises as with Euro.
Here is a great video on how to invest. Careful! It's about 60 minutes, but is a great piece.
As for me personally, at this moment I would go for 50% into Gold (for securty reasons) and 50% into Intl. Stock markets (hoping it will grow) and see how they will perform. And what would be your choice?
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