What is happening to the World???

If you have been following the business news for the past few weeks, you would have realized that it has been one of the most craziest moments in 2010, with financial news bombarded with tons of headlines and stock markets moving like a roller coaster. If you have not been actively observing the recent activities, here's a summarized list of significant headlines:

  • Greece faces huge debt problems.
  • Goldman Sachs was charged of fraud, sends the stock markets down due to investors' fears.
  • The International Monetary Fund and European countries announced a 110 billion euro 3-year bail-out package for Greece.
  • Gold shoots up to beyond US$1,200 per troy ounce.
  • The euro drops to a low, due to fears about the strength (or rather the lack of it) in the Eurozone.
  • On Thursday, the Dow Jones Industrial Average mysteriously fell by almost 1000 points within minutes, causing panic in the markets. Some say it is due to concerns about Greece, some say a 'fat fingered' trader carelessly sold billions of stock, when he should be selling only millions; and others say it is due to technical faults in the computerized systems. Whatever the reason, Obama has demanded an investigation and measures to prevent a reoccurrence.
  • Stock markets rebounded strongly on Monday, recovering back most of the losses suffered on Thursday.
  • The IMF and other European countries have agreed upon a US$1 trillion war chest to support the Euro and other central banks.
  • (Today) Asian stock markets are confused. Rose earlier in the day but ended lower.
  • (Today) Silver rises past US$19 per troy ounce.

Wow, so much have been happening, but how does it affect you and me?

Firstly, always remember when there is a crisis, there lies an opportunity. Asian markets have been affected by the European saga, and therefore have been priced lower. IF you think that the Asian region (such as China and India) will see growth over the next 5 to 10 years, this may be a fantastic window of opportunity to get in and buy some investments.

If you noticed, gold and silver always triumphs in times of uncertainty and crisis. You may wish to protect your assets by investing in precious metals, as they have historically been a hedge against inflation, war, political and financial uncertainty.

If the idea of keeping physical metals in your safe does not appeal to you, consider mutual funds of companies dealing with gold/silver and other natural resources such as oil & gas, energy and mining. On average, they tend to yield better returns than the physicals.

We may be looking at the greatest period of wealth transfer in our lifetime. The wealth will transfer from the less financially educated (people who are not bothered, uninitiated, and only knows how to put their money in the bank and fixed deposits) to the financially savvy (people who knows what asset class to invest in, and how to invest).

The question is, which side will you be on?