There are very few assets that are truly global…
We live in a global World.
The virus has made many of us forget that.
But hopefully the vaccine will work and we’ll get back to normal…..whatever normal is.
You don’t need me to tell you we were in a mess before the virus arrived….now it’s a whole lot worse.
If you look around, there are very few assets that are truly global. What I mean by that is they have value regardless of where you take them. And here’s another important point….it’s nice to have something that’s portable.
Which rules out property.
Yes, there are many things to like about real estate. But portability is not one of them. If you go abroad you should not try and pack your house….or any other property you have.
Property is more about location.
For most of us, that leaves shares, bonds and cash. Whilst on the one hand these are far more portable than property – there is a currency risk you need to think about.
Take a look at the chart.
There are really two points to note.
Firstly, with the exception of 2013, gold has performed very well against all the major currencies. This is particularly important if you’re thinking of moving from one country to another. For example, if you want to move from say Hong Kong to the UK – you ideally want the Hong Kong dollar to be strong relative to sterling when you convert your money. And then sterling to regain its strength once you hold it.
Unfortunately, the World does not work like that.
Looking at this chart, I personally would feel more comfortable having at least some of my capital in gold, in case the currency I’m planning to use collapses.
My second point is equally compelling. Perhaps you don’t know what currency you want to move into. You may be moving from one country to another and have a lot of other moving parts….such as a visa application. Let’s say this gets turned down and you have to apply to live somewhere else.
This is perfectly plausible. You convert your money from your local currency into that of where you’re planning to move (there’s obviously a cost to this). You then have your visa turned down so you have to apply for a visa to live somewhere else. In the meantime, the currency of the country where your visa was denied….falls….leaving you with less cash to convert.
Which is why I think you should think about Gold. Don’t get me wrong, there’s also a lot to like about bonds and shares. But do you really want all your eggs in these two baskets?
Portability is just one benefit of owning gold….there are many others.
I’m writing this in the UK – with BREXIT now just days away.
What will it do to the British pound?
I don’t know. And I don’t think many others do either.
If it goes up. That’s great.
But if it falls. I don’t want to lose my purchasing power.
My house, salary and some of my savings are in British Pounds. Some diversification makes sense for me.
What makes sense for you?
Simon Popple writes The Brookville Capital Intelligence Report. More information can be found at www.brookvillecapital.com