Should we invest in Gold and Canadian and Australian currency now?

follow the moving capital?

With debt mountains growing in Europe and the US it seems precarious to place any capital in bonds or the volatile stock markets. 


I am a subscriber to Martin Armstrong’s theory of capital movement and cyclical asset bubble creation. By increasing interest rates it makes sense that capital will inflow into any country to take advantage of the return over and above risk-free rates. With global banking, money moves easily from one side of the world to the other. Why would increasing rates slow your “fake” investment economy down? It may slow down your real economy based on goods but then the West has had a decreasing share in this type of trade for decades and Services (especially financial services) have taken over our previous industrial economy.

Importantly, capital moves to where it can achieve the highest return for the least risk. If you think about money flowing around the world moving in the path of least resistance it makes sense that it would choose to move closer to areas of easy growth over time. Look at Japan, lower the rates and money will flow out of your economy and come to higher returns in the US, or other parts of Asia thus prolonging your stagflation. Japan is far more of an export led economy that the US or the UK, if lowering rates didn’t work for them why would it work for the service industry centric western economy?

As the velocity of this cash movement increases to this area of higher rates, asset bubbles are created and this in turn changes the risk reward profile of the investment and the “smart money” realises that the risk is too high. Again, the capital starts to ooze out of investments first slowly and then with an increasing rate to find the next easy slice of lower risk investment. The typically slow moving retail investors who are slow to enter the engorged market and equally slow to leave are the losers in this great tide. Getting in to the game too late and staying much longer than the architects of the asset bubble. It’s well known that these cycles of investment exist but unfortunately the investment secrecy serves to enrich the few at the expense of the many who can’t invest enough time to back test this as they’re probably too busy doing something useful for our economy like creating and distributing food. Banks and global asset managers take advantage of this and facilitate amazing levels of conceited and self interested activities in order to enable the wealthy to continue their status in society performing the most socially derisory task – making money from money. 

So what’s the recommendation? Move your money to the Australian or Canadian dollar for a 15-18 month time frame and you should avoid the currency destruction that’s about to occur in US and the UK. Just doing this should give you a healthy return.

In a longer time frame attempt to invest in physical gold rather than gold ETFs or stocks as the likelihood is that there isn’t as much gold as people think there is and when the chips fall down it’s the physical gold holders who are actually going to get their hands on the stuff rather than the paper holders. Martin Armstrong believes that gold has a long way to go due to the forced destruction of the western currencies to deflate their debt away.

So in short, Australian and Canadian currency will continue to appreciate due to their governments increasing interest rates and gold will continue to go upwards because of the weak currency stance of the US and the UK. Lets see if I’m right in Dec 2012. If you read this then post a comment and let me know.