Diversification is usually good, but I'm not even bold enough for that right now. I do expect wealth will shift to China over the long run, so I hope you're still posting Chinese opportunities years from now. However, in the near (6-12 mos) and intermediate (1-3 years) term, I think the manufacturing and creditor nations suffer as the consuming debtors have their lifestyles realigned in accord with their deteriorating assets, income, and scrip--all coupled with an increased need to save.
Gold will shine unless the US returns to banditry and seizes it from its citizens. I wouldn't underestimate that risk, which is one reason I hold mostly Canadian gold shares. Bernanke's speech made clear what no one should have doubted (that the Fed will inflate as needed to avoid deflation), and now Greenspan's recent speech hints that the gov't will welcome gold serving as the (official?) signal of progress in preventing deflation--and not coincidentally, devaluing the dollar.
If the world embarks on a series of competitive devaluations through this or more formal means, gold rises. If just the US does it, gold rises against the reserve currency. The Fed can't have a policy that will stave off deflation and not benefit gold.
So for me gold shares, shorts on stocks such as FNM, GM and the like, E&P cos, and occasional tech forays seem likely to preserve capital and offer some return. Real estate makes much more sense in a rising nation where it is dear, not an overextending consuming nation where it is plentiful and pricey. Real estate can't run away from the taxman, who is likely to come calling in the U.S. as state and local gov'ts find they need to pry more money from those who have it, given an increasing number of those who don't. |
