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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: JHP who wrote (195627)	10/6/2002 2:57:45 PM
From: Simba	Read Replies (1) of 436258

JHP, Yes, people in emerging market countries should diversify their assets into developed market currencies such as USD and also gold. But the fact of the matter is some emerging market countries do not allow full convertibility to other currencies, particularly for the common man with a small asset base. High net worth individuals in all these countries know the fragility of their currency and already stash their wealth in Swiss banks or in the US banks. For the common man gold is easier to purchase and use as a hedge against inflation. Also it is not the currency per se but how you invest in that currency. Gold has done better with inflation than money market funds. As an example, take India. Its Rupee is not freely convertible. The rupee has depreciated against the USD by 380% the past 12 years. Clearly for the Indian common man with lack of access to stable currency markets, gold has remained the attraction as it can be bought in small jewelry etc. And gold by more or less retaining its value in USD terms the past 10 years the Indians have actively hedged against their currency weakness. Simba

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