Where to shift your investments if US Defaults?
It seems US will have to default at some point of time now. Politicians are still craving for a feasible solution while the deadline for default on 2Aug is approaching. Downgrade of US is certain as credit rating agencies have said that until $ 4 Trillion deficit reduction plan is worked out by US government, they will not restrain from downgrading US government Bonds and it seems that this is very unlikely to happen in near future. As soon as downgrade occurs, the cost of financing the debt will rise and US government Bonds and Securities would no more remain as safe as it used to be. To hedge this uncertainty investors have already started migrating to safer investment horizons. Here are many ways to hedge the US default risk but here are the ones whom I think are the best ones:
1. GOLD: Nothing can be better investment than the GOLD. The metal has already seen a fine rally in recent months and is hovering at all time high. A correction od any sort in GOLD prices would be a great buying opportunity now. Historically, GOLD had always been a good investment because of its physical value. Though considered to be non yielding investment GOLD is still better than Fiat Currencies.
2. SILVER: Silver is another commodity to look for while hedging against US default. Astronomical rise in Silver prices along with Gold shows shift of belief among investors and fact the silver has a wide industrial application makes it important metals more so. Backed by physical value and industrial demand, silver can be an option to diversify the investment while hedging against US Dollar. Though Silver is not as good investment as Gold because demand of silver often changes with performance of economies due to its dependency on industrial demand.
3. SWISS FRANC:
Arguably the best currency in the world to invest in current economic scenario. Swiss Franc is also at all time high. Switzerland has kept itself firewalled from European Banking System. Money has been poring into the country from Europe and rest of the world in search of safe heavens.
4. SINGAPOREAN DOLLAR: Singapore is among the fastest growing economies of the world. With Asian economies strengthening their positions in the world, Singaporean Dollar is a must own currency. Singapore is much like Switzerland with hub of private banking where more and more private players are parking their money.
5. FARMLAND: When there is ultimate economic collapse, the Farmland is the ultimate investment hedge. Fundamentally, nothing can better than owning something which people would always need till they are alive. Value of farmland can never vanish and an economic catastrophe can only increase its value. Few of the big hedge funds in US have recommended buying farmland in case of economic disaster.