During the financial meltdown due to the subprime mess, gold may not be the ideal vehicle to protect your portfolio
Sue Brown
Jul. 21, 2007

The subprime mortgage meltdown is helping the price of gold and US Treasuries rise and dollar fall. Right now it is a flight to quality. When the extent of losses and the affect across the global financial system is clear, people especially the Asians will start questioning the confidence in the financial system.

The net effect can be very strange. The dollar and all other currencies including gold can fall simultaneously as countries lose trust in others currency systems and the worldwide financial infrastructure is shunned.

Gold and US Treasuries will initially enjoy the flight to quality. It is happening now and will continue for a while. Then, there will be a sudden change. Gold and Treasuries can fall and actually dollar strengthen as nations decide not to trade in the middle of mistrusts.

When you take the American economy and chuck out all the trade partners, except for oil, it is self-sufficient and is most robust. In the middle of the meltdown, in 2010 and beyond, dollar will gain and gold will go down with other currencies.

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READ MORE>>

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