Haha, actually gold is not a bad idea, since you are actually investing in a commodity. You can buy gold on any stockmarket and it's held just like shares. You don't actually walk around with it in your back pocket It's also generally priced in USD. I'm not 100% of my calculation here, but if the USD goes down, the price of gold should go up I believe to compensate for the loss in value. Perhaps not immediately but certainly not long after. It's also considered a 'safe haven', so investors taking their money out of USD are more likely to invest it in gold pushing up the price there.
But if you just want to have your money in a bank somewhere, investing in gold is quite a bit more speculative ...
The history of bank notes is that they were to be exchangeable for gold bullion at the central bank; they were simply a "promise" by the central bank to pay the bearer the value of the note for gold - hence the term promissory note.
Personal cheques are similar; they are simply a promise to pay a certain person a certain amount of money. They are like personally issued currency.
Anyway, I remember reading on a 5 pounds sterling note that it said words to the effect of the note being exchangeable at the Bank of England for 5 pounds. I thought to myself, so I rock up with a fiver, hand it over, and all they do is hand it back?
James you are right in what you say but my point is this, now 5 Pounds is worth roughly what? 10USD (roughly) about 15 years ago 5 Pounds was worth roughly 12.5 or 13USD so although 5 Pounds is 5 Pounds and 10 USD is 10USD what is it worth in the real world and what is a safe bet to save in cash, in 3 years time will 5 Pounds be 10USD or will 5 Pounds be 8USD?
I wouldn't touch currency markets as they are extremely volatile. Instead, I'd look at investing in the derivatives market in the form of options (call or put). Basically, options allow you to buy or sell a certain number of shares, at a pre-determined price, at some point in the future. As an example, XYZ Company might be currently trading at $1.00 per share, but you think that in a year it will be worth $2.00 per share. So, you buy some options that have an exercise price less than $2.00; say $1.50 per share; i.e. the options allow you to buy the shares at $1.50 at a given point in the future. Each option that you buy might give you the right to buy say 1,000 shares. The beauty of the option is that it may only cost you a few dollars to buy each option, yet it gives you the future "right" over 1,000 shares. Anyway, as the share price increases towards the $2.00 mark the value of your options goes through the roof; remember that you have control over many thousands of shares. So you sell the option, take your profit, and look for another opportunity. However, an option is a wasting asset as it has an expiry date - the date that they must be converted into shares. If the share price languishes below the exercise price as the expiry date draws near, the value of the option decreases and eventually becomes worthless.
James, I think options are way more risky than what Paul is after For starters, options can actually lose you the entire 'investment' (read:gamble). If I understand correct Paul just wants to place his money in a currency that' not going to see 10% knocked off its' value in the 'rest of the world' when it comes to spending it. I'd stick with safe havens like the pound and the euro for that. Sure it goes up and down a bit, but it's all relative to the countries you'll eventually be spending the money in...
On that note, if Paul is planning to spend 10 out of 12 months travelling in Australia, then really there is no choice. You should buy AUD as it's got essentially no risk for you and you'd expect interest rates to cover the inflation.
Sam I am, you are dead right, I am not looking to invest or dabble on the stock market, I am purly after changing Chinese Yuan into another currency which 'hopefully' won't loose me money. I think I will use the Pound or Euro as you and many others have advised. I appreciate that any currency would be a gamble but I beleive the Pound or the Euro will be a safer bet than most. Thanks for all your help it's much appreciated.
Fair enough. Options are risky, but yuo can invest a relatively small amount so the upside can be large whereas the downside can be quite small.
I just reckon currency markets can be all over the place in their volatility.
The USD is terminally ill - there's no fundamental reason for it to ever rise again.
Serious inflation has taken hold here in the US and the Federal Reserve wants to lower interest rates which will do nothing but exaggerate the decline of the currency. I'm thinking about converting my $ to Pounds.[/quote]
Well put VXMIKE. Until the US Government stops borrowing 2 BILLION per day for this insane 2.5 TRILLION $ (projected) Oil war nothing is gonna change. So, figure out when that will end and America gets some REAL leadership, not crooks, and MAYBE the Dollar will rise again. This is what happens when you vote for a guy cause "He'd be someone to have a Beer with" instead of voting for a leader with a brain and a plan - NASTY BLOWBACK....... Zoom