Buying Gold or Dollars?

January 19th, 2009 | dollar -

Readers Question: Hi, Please advice me that shall i buy Euro or Gold as Dollar is very uncertain and I Live in middle east and we are pegged with Dollars.

In times of great uncertainty, gold often proves a good investment (see: Investing in Gold during times of recession)

Many factors still point to a weak dollar

Very low interest rates
Current account deficit
Quantitative easing – increasing money supply
Growing National debt

Some people believe with a combination of factors such as this there is a risk of a large depreciation in the dollar (See: Dollar in 2009) However, whilst dollar has risk of weakness, it must be remembered we face a global recession so all currencies / economies look threatened.

Last year, the dollar rallied as investors decided the dollar was probably better than many emerging economies.

I cannot give any predictions with certainty (I don’t think anyone can). At times like this there is a good case for diversification i.e. don’t put all your eggs in one basket.