UNDERSTANDING HEDGER'S CHOICE: GOLD

source: logammulia.com

Hedgers! 

Let us call you "Hedger" for investing to avoid avoid the loss of the value of money. Our previous post (see https://theallaboutbusiness.blogspot.com/2017/12/whats-your-motivation-investor.html) talked about the type of investors followed by the instruments. Now, we are trying to break down the "Hedger's Choice", in which instrument they invest the money. 

In this post, we'd like to discuss about Gold. Gold is a popular commodity. Gold doesn't corrode, decay, or rust. Gold is easy to store and it just gets easier to obtain gold. That's why gold becomes popular amongst other commodities. People save money in gold to get prepared for a certain spend in the future. Others do this to face economic instability. Gold makes the value of your money more stable. Let's just discover more truths behind the brightness of a gold.

TYPE OF GOLD

- Gold Bar

Gold bar is quite easy to find. The gold stores lie everywhere even in a small town. You can get gold bar in such store and it's just getting easier to buy gold bar since it's available via online shop.

Just make sure you buy pure gold which means 24 karat. It's also known 99.99% pure gold. You don't always have to buy 99.99% pure gold because 22 karat and 18 karat gold are also available. Despite the variety of the gold purity, the 24 karat is the best choice to invest. After you buy it, keep it at house in a safe deposit box or you can store it in a bank or another institution. 

And here you are, the example of gold bar weights: 0.5 gr, 1 gr,  2 gr, 5 gr, 10 gr, 25 gr, 50 gr, 100 gr, so on. Just so you know, the heavier gold you buy, the less the spread is.

It is highly recommended to buy gold with LBMA certification. In Indonesia, ANTAM is the only gold producer with LBMA certification so far. ANTAM also release Gold Dinar (gold coin) with varied fineness.

- Jewelry:

Gold jewelry is also an instrument. You can convert your asset into gold jewelry especially the 24 karat one. It's actually good choice since you can easily liquidate it in times of need. There are some exceptions though.

To sell gold jewelry is not as easy as to sell the gold bar. You need to consider the jewelry trend, special treatment of storing gold jewelry, and the less amount of money you get compared to the amount of money you have to pay when you buy it (this is mainly because when you buy the gold jewelry, you also pay for the cost of casting. Also, note that you have to select a gold store to buy your gold jewelry for the best price.

- Gold Deposit Account:

It's a breakthrough! You don't need to own a gold bar and store it, you will get such a passbook instead. The point is, you don't have to buy the whole bar to possess a gold. You only need to save your money  regularly into a deposit account that you can convert it to a real gold bar when needed. Of course there is a certain rate when you convert the deposit account. Also there's an extra charge 

- Gold Trading Account: 

There are so many ways to invest in gold. Some give you a chance to own gold virtually. Just like a trading account. Some trading platform provide us commodities to trade. Gold is one of them.

Put your money here and you don't really have to hold your gold for the long term. Please note that gold has a large spread that a slight movement of its price will affect nothing to your account balance.

WHY GOLD?

Instead of saving your money in a bank account, I hope you buy gold. It's never too late to buy gold today. The gold is always on the uptrend. In case you ask what gold is used for:

- Tradition That's right! In a certain occasion, gold is used for a traditional celebration or a ceremony. This leads the demand of gold upward.

-  Financing.

- Down payment. In a certain business case, you may use gold for a down payment.

- Collateral of a loan or a mortgage.

- Electricity and many more.

Since gold is widely used for so many purposes, it becomes one of the most popular safe haven. For your information, gold's month-on-month trend is declining. It has since fallen quite far from the highest point. So, it may be our best opportunity to invest in gold. For the latest update, just hit these website: Kitco.co, goldprice.org, logammulia.com.

Let's end this year spectacularly, guys. Just make it as shiny as gold!

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A REFLECTION: LET'S END THIS YEAR SPECTACULARLY

2020 will come to an end as we keep counting down the days. Can't lie that 2020 is considered one of the worst year ever for most people. The uncertainty still lies ahead mainly because of Covid-19 pandemic. It has an impact on several sectors of economy such as the increasing number of poverty, the deeper recession, and the slow down of economic activity.  

I never hope that it will go worse but we have to prepare for it. Even we have to take an advantage of it. There's still a chance despite the condition nowadays. Let's have ourselves a time for reflection on what we have done before the outbreak of Covid-19.

We can see above, a picture taken from my previous post, to buy gold last year and to hold it until today probably the best strategy to take. By Friday September 4th 2020, gold's price reached USD 1,933. That means it's a new all-time highest price record of gold. Let's get it noted that last year gold surprisingly made a record of the year and it keeps going on hitting new record. Imagine how much return you can gain if you had invested your money in gold last year.

 

image source: goldprice.org

And now, since gold hit USD 2,000 an ounce for the first time ever several days ago, it likely declined a little bit. I believe it's just a sort of correction. The price will just move no lower than USD 1,900. You may hold your gold for a while. There's no need to sell your gold too early and once it breaks USD 2,000 again, then it will form another higher level of resistance entry.

image source: finance.yahoo.com

During the outbreak, try to save your money in stock and invest it in consumer goods producer such as UNVR or ULTJ. The demand of consumer goods remains at its best though the outdoor activity is being limited. UNVR and ULTJ are still reasonable to buy especially for long term investment. Let's add UNVR and ULTJ to our watch list for the next one week and we'll discuss it later.

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A NEW HIT FOR GOLD AND IDX COMPOSITE IN 2019

The beginning of 2019 seems to be a good time for Gold and IDX Composite. Gold finally comes back to 1,300 USD again! IDX Composite is in very good uptrend in fact. Go buy them if you dare!

There are some reasons why you need to buy them soon. First of all, it is because the uncertainty. This year we will face some daunting risks the uncertainty grows.

Geopolitical conditions is still in the mix. We don't really know when US-China trade war, Brexit, and US government shut down come to an end or even get worse. Yes, it is true that Mr. Trump just ended the shutdown, but it is temporary. Just so you know, according to what we read, this is the longest US Government shutdown in history.

We believe that the uncertainty won't get clearer than before even if Mr. Trump gets the money to build the Border Wall.

Financial condition is likely to affect the market the most. IMF cuts global economic growth forecast as they said at World Economic Forum several days ago. And don't forget that The Fed will slow down this year, no more raising rate. At least The Fed won't be as aggressive as last year. All of this just because of the uncertainty.

Such condition usually pushes investor to move their money to safe haven. When this happens, safe haven's demand will rise, making the price get higher. Safe haven such gold should benefit in many ways if those conditions get fulfilled.

TIPS

GOLD

Buy now! Since the price is now getting through USD 1,300 for the first time this year, that means gold breaks another resistance level. Gold attempts to reach higher considering last year's highest point is USD 1,350. Gold will play in USD 1,300 - USD 1,350 area for sure. Chinese New Year celebration on February should support gold movement as well.

We believe there will be a correction when US-China trade war talks about a new deal on March 2019. Make a good portion of your portoflio for gold before it's too late. You only have one month left to make a decision. 

IDX COMPOSITE (IHSG)

In Indonesian, it's called "Indeks Harga Saham Gabungan" or simply abbreviated as IHSG. Watching IHSG's movement can make me smile. The price keeps hiking up!

Exernal factors influence IHSG positively. Uncertainties affect foreign investors to put their money in IHSG. IHSG still moves upward at least until the end of February due to global economic slowdown.

At this time, what you need to do is to buy while you can, especially one month from now. When you buy enough, you can wait and see then. At a certain time, when commodities start to decline, you can sell when the price is still high to have a gain. Everything can happen in the future, so it's much better if protect money soon.

Next post we'll renew the correlation between price movement of commodity such gold and some variables.

Image source:

Yahoo Finance.

News source:

Miscellaneous.

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PUT YOUR MONEY NOW, OR ELSE YOU’LL REGRET EVERYTHING!

Happy Investing, Happy Voting!

Why voting? 2018 and 2019 will be our country’s election year. Get prepared, Indonesia! Hope we can take the advantage of this.

We got two big issues to discuss today; The Fed rate and Election year (Indonesia). From these issues, we’ll give you some consideration to invest your money and rate of return comparison of several investment instruments so that you can “place” your money better.

Before we talk about the issues, let’s compare which haven has the better “treatment” for your money.

INSTRUMENTS

Foreign Exchange (Forex)

It was 2008 when one USD was equal to 8,900 Rupiah (IDR), we converted IDR to USD regularly and let it “sleep”. Yes, we bought USD every month and we did it till one USD/IDR hit 9,500. Just let it sleep, guys.

That’s right! You can see that today, one USD is equal to 13,700-13,800 IDR, what a gain! Especially if you have 100,000 USD right now. So, let’s just say that we had one USD for 9,000 IDR, and now we have one USD for 13,700 IDR. That means we have 52% profit margin.

Before you convert IDR to USD, please consider the sharia law. We can't buy money for money unless you need it for export-import activity. Be very careful.

Gold

We started to buy gold around 5 years ago. Yes, it was 2013, a moment when gold experienced its biggest drop; from more than 600,000 IDR/ gram to 480,000 IDR / gram (1204.5 troy ounce).

It’s not just a decline, more than that, it’s an advantage instead. Yes, that was the right time to buy gold; Gold had never been this cheap before. We bought gold for the first time in 2013 when it cost 490,000 IDR/ gram. We bought it regularly; once in three months or once in a semester. It depended on the budget. Just like forex, of course we let it sleep.

As you can see the gold costs 625,000 - 650,000 IDR/ gram nowadays (it even hit 1,350 USD/ ounce several week ago). Let’s assume that we have 135,000 IDR profit in every single gram of gold (625,000 – 490,000), that means we have 27.55% profit margin.

Business

Such a great experience collaborating with my friends to establish a business. Cellular business exactly. It’s not a coincidence I met great partner to run a business. We knew each other well before we founded it (I actually joined them when the business had established).

The three of us put 900,000 IDR capital into business. It turned out very lucrative. Joining them in 2015, we got break event point in less than two years (I could say that I got capital gain in one year only).

Unlike two kinds of investment above, in business, you can’t let it sleep. You need to make it bigger, expand it, and manage it well of course. And today we have the fourth member to run the online business division.

Property

Putting your money in property is fantastic. It grows more than 16% just in one month. We started to buy a plot of land in February. Our smile has never been this big as we learn that the price already moved up at the beginning of March.  

Find the best payment to own a property from now, because it tends to get more expensive as the time goes by.

Stock

By the end of 2015, The Jakarta Composite Index touched above 4,500 IDR. By the end of 2017, it made a record for itself; hit 6,000 IDR for the first time. Indonesia Composite was closed at 6,304.95 at the closing of last weekend. That means we can achieve more than 30% capital gain. What a gain! 

ISSUES

Raising The Fed Rate

We still remember when The Fed raised rate by the end of 2015 for the first time in a decade, the price of gold was quite affected but then the gold kept raising until today.

Another story, it seemed that USD kept moving up against IDR. It was only 9,000 IDR for one USD in 2008 and today USD/IDR likely to drop to 14,000.

In spite of The Fed’s raise, since it is not the first time they raise rate, we believe that gold won’t sink further. There will be a correction but won’t be big. Just keep in your mind that “history repeats itself”, gold keeps moving up despite facing the raising rate several times.

On the contrary, we predict that IDR will drop deeper. IDR never gets better against USD recently. As Powell succeeded Yellen, the issue got stronger and they planned to raise rate four times this year. We can’t deny that when this happen, foreign investors will bring back the fund to the USA. It is common thing that investors expect higher return when The Fed rate gets higher as well. That’s why IDR will surely fall.

Election Year

Election campaign is inevitable. The campaign uses any means of communication. That means today is the right time to buy stock of telecommunications service. When the election reaches its climax, normally the market reacts. Or you can relate the price movement with candidates’ promises so you can choose which stock is the best to buy.

The price of property usually raises as the countdown to election begins. Who knows that the elected candidate think about a mass infrastructure development in the future. Who knows that the elected one plans to issue a policy to boost up a business’ prospect.

STRATEGY

Some investments have certain treatment. You can make gold, stock, bond, or even forex fall asleep after buying them. You can “wake them up” when you need it or when the time seems to be pretty good to sell. In business you need to always upgrade it, expand it, and manage it well. Any important issue should be watched because there is an affection for sure.

Different instrument, different issue! Some will gain a maximum profit when crisis engulf us, others will gain a profit as well as the economic outlook has a bright future.

You don’t need to be rich to invest, you need to invest to be rich! The key of investing is budgeting. Don’t spend your money, at least save it every month and start to invest. When you can save regularly, you can invest regularly then. Buy any kind of asset once in every three month and it’s much better if you can buy once a month.

Stay rational, not emotional. For beginner, you can follow the mainstream of investors’ habit. Hold your Gold and IDR until they announce the raise. Start investing now regarding the election. Remember, prediction can be wrong and therefore prepare yourself well!

Happy saving, happy investing, happy electing!

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WHAT'S YOUR MOTIVATION, INVESTOR?

Some invest their money to gain a certain return and other put their money just to hedge as a protection against rising inflation or some uncertainty. Or maybe they just gamble? Who knows....

Everybody knows that there are certain risks in every assets, instruments, or business operations. By knowing your motivation of investing, you should be able to reduce the risks. You'll have the best choice of assets to invest that fit you as well. In this post, we'll give you three possibilities of investor's nature according to its potential risk. We'll also provide you a chart to make it clearer.

1. HEDGER

To hedge is a way of protecting, controlling or limiting something (Cambridge Advanced Learner's Dictionary).

Clearly, a hedger (Can I call an investor who is hedging "Hedger"?) has a good sense of investing. Some say that people hedge to avoid the loss of the value of their money, they avoid the potency of rising inflation. Yes, we can describe that hedger will always try to reduce the risk carefully at certain rate of return.

Hedgers always figure out what result they expect. Let's just say that a hedger use long term trend to make a financial decision, whether to buy or to sell. A fundamental analysis is the main tool to analyze the price movement. Hedger analyze Economic policies such as rate, inflation, the number of unemployment, geopolitics condition, etc.

Hedger tends to like a fixed return and sometimes capital gain is considered as a hedger's main target. Gold, Fixed rate Bond, or even land or property are good instrument investment for hedgers. Some also invest in stock. To put  money into a deposit account for a certain term is also considerably an act to hedge. 

Since hedgers are best known for their good planning, they'll consider how much interest they will earn and for how long they'll keep the asset. 

2. SPECULATOR

A speculator is a person who buys goods, property, money, etc. in the hope of selling them at a profit (Cambridge Advanced Learner's Dictionary).

Short term trend are often used to make a decision. This short term meaning is quite relative but it surely has a narrower time frame than long term does. As an example, when Non Farm Payroll (NFP) result is announced on every first Friday of month, speculator will be ready to set a position in order to gain profit as much as possible.

Foreign Exchange (forex), stock, float rate bond, or other short term debt instruments offer the best choice for speculator.

3. GAMBLER

someone who often  bets (= risks money on the result) money, for example in a game or on a horse race (Cambridge Advanced Learner's Dictionary). There is no certain trend for a gambler to analyse. There is no certain news for a gambler to read. 

To be honest, gambler never count the risk and occasionally blinded by the profit expectation. By the time the trend moves up, gambler sets long position. Forex, derivative instruments such as option, futures, swap agreement fit most of gambler's nature.

I'd like to draw a chart describing three types of investor above. This chart is based on a risk in each types. With a good planning, hedger has the least risk but often has the least return though. On the contrary, Gambler has the highest return (if lucky) and the highest risk of course, the possibility will likely lead to a loss more than a profit.

We hope you can understand what your motive is before investing to know the risk you'll face. Having a plan to buy a car, house, do some business,or even plan how you receive your pension, need a right investment decision.

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THE FED VS GOLD: "25 BASIS POINTS RAISE FOR 2% DROP"

Hot news!

As The Fed raised 25 basis points of interest rate, gold dropped immediately. As a conclusion of Federal Reserve's Open Market Committee on Wednesday (June 14th), the interest rate raised reaching 1.25%.

We all know, when interest rate goes up, people expect more gain from their investment in stock, bond, etc. This means the government has a confidence in the economy. 

Meanwhile, the gold market reacted negatively. It was common that US Dollar and Gold had a negative correlation. When The Fed raised on June 14th, gold's price moved down. Yesterday it hit the lowest point in USD 1242/ troy ounce and today, it touches 1245.2. It drops more than 2% from its highest position about a week ago (USD 1280/ troy ounce).

Since it's a fundamental policy, this price will likely stay longer, at least until the end of June. What you need to know is, it's true that gold drops, but not for that long. It happened before, gold got low when The Fed raised but soon moved up (remember the end of 2015?).

So, why don't you buy gold now?

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WHAT WILL HAPPEN IF YOUR COUNTRY ADOPTS ZERO (OR EVEN NEGATIVE) INTEREST RATE?

image source: monexnews.com

There's a high correlation between inflation and interest rate. Let me explain you, the more people spend their money, the higher inflation goes. Increasing interest rate will be done to control inflation. All in all, people's spending power will lead to a scarcity when producers can't fulfil the demand. That's why inflation rises and so does interest rate.

We all know that investing in financial asset has a better return (and better risk of course) when the rate is high. The question is, what will happen if your country adopt zero or even negative interest rate? 

First, deflation! 

Deflation is considered as a reduction of the supply of money in an economy, and therefore a reduction of economic activity, which is often part of an intentional government plan to reduce prices (Cambridge). Deflation is bad as hell to me.

Deflation indicates a lack of economic growth. Economic growth shows us that consumer prices fall. The condition can be worse, guys. You can imagine, as a consumer, I might delay my purchase, expecting the prices fall further. I'm afraid that cheap price affects the labour market. As I said earlier, deflation means low economic growth. Low economic growth causes low production and finally affect the labour market.

Cutting interest rate?

Well, I can't say, by reducing interest rate is the best way to solve the problem. Lowering interest rate means reducing the opportunity to add my bank balance. In a country with zero or negative interest rate, I would just withdraw all my money if I were you.

In investor's point of view, clearly, low rate means low return. Investor absolutely won't buy any financial asset for low return. They tend to hold their money. As a result, government will spend more money to trigger the market's pruchasing power. It is known as quantitative easing. Quantitative easing is usually comitted to trigger productivity. With increasing productivity, there will be a hope for a country's economic to grow well.

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WHAT GOOD WOULD YUAN DEVALUATION DO?

Well, Well...

Several weeks ago, China had devalued the Yuan. As always, market reacted soon after the announcement. We know that China is number 2 greatest world's economy. As Yuan got weaker, US Dollar got stronger.

There are so many questions about how it will become when a country devalue its currency. Of Course, China's government through People's Bank of China (PBOC) had certain consideration for devaluing the Yuan. Now, let's just imagine what we'll get for devaluing the currency:

1. China's stuff will be much cheaper than before. It's something like discount. "It's such a great chance to shop more China's stuff!" They say.
2. The more countries buy China's stuff, the more revenue China will get. "Our promotion was successful! Look! We have a significant growth of sales!" They say.
3. Every single currencies in this world move fluctuative against others. China's debtor would be very happy to hear the devaluation of Yuan as if the debt's becoming cheap (that's true!).
4. This devaluation can be considered as an effective incentive for the debtor to pay off. As a creditor, China will earn more money from its debtor. This is good enough for national budget.

The point is, Yuan now looks cheap. China's products (goods and service) looks more affordable.

This condition will push China's cash inflow (in long term) and thus to have another opportunity to rise!

Let's see...

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WHAT COULD GOLD PROMISE US?

Gold finally regain its highest position after about a month drop. As we can see the graph below, gold touched IDR 515,000 which equals to approximately USD 1156/ oz (and may be still moving upward) as of August 21st.

This movement happened since The Fed can't reach the inflation target yet. What's the implication? What's the relationship between gold's price and inflation target? How can gold keeps its uptrend? And the story begins...

Simply, when your country's inflation rate rises, the government will raise interest rate. 

All investors know this slogan; "The higher interest rate, the higher return will get", " With great rate, comes great return", etc.

Investors will put money in your country, expecting high return. When money flow in, there will be an opportunity to have a good economic growth and therefore your currency moves up.

The illustration above is one of the reason how US Dollar gets stronger lately. The fact is, US inflation rate is still out of target. It means, The Fed won't raise rate for a short-term. Finally the investors doubt US economic outlook. See the picture below.

Since The Fed gives you uncertainty, you will leave US and seek for another safe haven. You will put your money in gold for the stability of its trend. With the high demand of gold, it continues to grow.

Certainty! Gold gives us Certainty! Even Prophet Mohammed said so.

Well, to improve our knowledge about how money works, let's keep discussing and sharing. See you next post.

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IT'S ALWAYS A GOOD TIME: GOLD TODAY!

It's been a long time enough I don't write here. And this time I'd like to present you a good insight of investing in gold. It's a nice moment to talk about gold since we have a downward trend of a gold's price, what a coincidence!

As one of the most popular safe haven, people seems to be familiar to gold. It's quite simple to convert your money into a gold; Buy at the lowest price, sell at the highest price.

This year, is a good time to invest in gold. As we know, gold is having its bad period. Gold has returned to the day when we had crysis in 2008. You can see the graphic below:

Gold touches USD 1087/ Troy Ounce this morning (Indonesia's Local Time). USD 1087/ Troy Ounce means you need to provide IDR 470,000-IDR 485,000 so you can own a gram of gold.

It's a downtrend! Just buy it on the double, don't make yourself wait! (It's shopping time....)

So, what kind of gold should we buy, especially for Indonesian? I suggest you to buy a gold bar produced by Aneka Tambang (ANTAM). It's well accepted not only in Indonesia. ANTAM gold is internationally legal.

Alright, the most important thing you should consider when you invest in gold is, this is a long term investment. Investing in gold coud be speculative, but trust me! It would be much better if using gold as a hedging. Gold is rarely volatile, still the trend is upward.

I've provided you the graphic before, showing that gold keeps its good trend even in crisis. Buying gold is one of the best way to keep your "money's performance",

Can't wait to write more about gold, guys. Just wait for the next article. Happy investing!

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RUPIAH AFTER ELECTION

July 22th has gone. The official anouncement said that Jokowi was elected President of my beloved country, Indonesia. As we know, the survey before showed that the society had high expectation for Jokowi to be President. And today, we'll just wait for Jokowi's inaugural speech.

Economists forecasted that Rupiah would get stronger after the election. We still remember when Jokowi was nominated as the future president, the Indonesia Composite Index (IHSG) moved up. But now, as Jokowi's named as the President-elect, Rupiah gives no sign of any "raise". Rupiah is still in USD/IDR 11,500 - 11,700.

What can possibly affect Rupiah?

We have many explanations. First, US Economic grows faster this year; 4% (until Q2) based on fxstreet.com while US GDP 2014 (until Q2) grows 2.8% based on statista.com the highest growth since 2008 global crisis. This makes USD moves stronger against its pair. GBP/USD, NZD/USD, and EUR/USD even get weaker (1.6876, 0.8493, and 1.3387 consecutive). This condition will surely affect Rupiah, too.

Second, the inflation rate is still higher than Bank Indonesia targeted (inflation target for 2014 is 4.5% while June inflation is 6.7% (see http://www.bi.go.id/en/moneter/inflasi/data/Default.aspx). BI rate (7.5%) and Net Domestic Assets position could affect rupiah, too.

Last, though the presidential election had declared that Jokowi was the winner, his opponent, Prabowo, is disputing the outcome. This case is now brought to Constitutional Court. I assume Rupiah won't make a good movement till the Constitutional Court's fixed result on the 6th of August. Well, let's wait another days and see what will happen to Rupiah.
By the way, you can shift your focus to US NFP data release. Have a nice trading.

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CORRELATION BETWEEN INFLATION RATE AND UNEMPLOYMENT RATE

William Phillips (1958) stated that there is negative correlation between inflation rate and the rates of unemployment. It's such a trade-off, when the level of unemployment decreases, the inflation rate goes higher. I myself was curious to prove the truth of the statement. I took the Indonesia's unemployment rate and inflation rate data since 1998-2013 and the result says so. 

Based on the picture below, the correlation is -0.3087 which means between unemployment rate and inflation rate have an inverse relationship.

You can also chceck out the scatter diagram below:

But, Phillip's study was just in short run. The question is, why can this happen ? Here is the explanation. As the unemployment level decreases will correlate with higher change of money wage. When the rate of unemployment rises, there will be less money supply. Since the economists say with the less money supply, the less inflation rate; that's true!

On the other hand, the increasing unemployment reduces the purchasing power. Yes, it's a trade-off. The only way to control the inflation is to change the mindset of the labor, to invest their money that it will be quite productive. In the next post, I'd like to discuss how to control the inflation.

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WELCOME TO ISLAMIC ECONOMIC ERA

This month I bring you a good news from my beloved Yogyakarta. Yes, in the end of the Islamic Economic Seminar in UNY, Yogyakarta, we believe that someday Indonesia will reach the islamic economic era. As we know, this economic policy won't allow you to bring interest in the system that will give us the best service in controlling financial health (it's true).

On September 22nd 2013, UNY held one of the greatest Islamic economic seminar in Yogyakarta. This hopefully represented the new Indonesia economic movement. Mr. Dumairy and Mr. Masyhudi attended as a speaker. They emphasized that sharia economic had to be put in our daily economic activity. Unfortunately, the government still limit the number of national project which is held by sharia bank. That's why sharia banking doesn't grow fast.

Based on why happened in 1998, When Indonesia was engulfed by the global economic crisis, when the overall Indonesia banking were collapsed, BANK MUAMALAT, as the first "pure" sharia bank in Indonesia, still stood upright, like no others. It was a proof that sharia banking would always be operational even if crisis struck.

Well, all we can hope is, sharia economic system will have a significant role in developing Indonesia. Indonesia is a country with the largest number of moslem. So, there's no doubt to make it possible.

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WHAT'S WRONG WITH YOU, RUPIAH?

It's been a great news recently. Rupiah, Indonesia's beloved currency, is devaluing against Dollar. Rupiah touched Rp 11.200,- against Dollar several days ago. I'm afraid that 2008 global crisis will happen again when Rupiah even touched Rp 12.000,- . Some said it was because US in good economic state that make Asia in poor economic state especially South East Asia. But the point is, Indonesia still import too many goods.

So, what effects could be made by the depressing Rupiah?

1. The price of all imported goods definitely rise; cars, computers and other gadgets, and even most of daily basic needs.
2. Indonesia Stock Exchange is also devaluing.
3. Indonesia import several raw materials. The price moves up then.
4. With expensive raw material, producitivity decreases.
5. Productivity decreases, the number of unemployment rises.
6. Rising bank rate may possibly increases the number of Non Performing Loan.

Finally, the government has made some solutions such as:
- Encourage all councillors to exchange their dollar to Rupiah.
- Tell the Bank Indonesia to increase the bank rate.
- Less import, More export. The government give additional deduction tax for certain exporter.
- Add more tax for imported goods.

In my opinion, we should be more productive. I've been planting chilli on my own to prove that we can still be productive. I know it's too naive. But if we all can plant at least, one of our daily basic needs, it means we depend on imported goods no more. Well, we hope the best for our country so we've got to do the best, too.

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WHY DO WE SHOULD INVEST IN GOLD?

image source: plazadinar.com

Gold! One of the most popular investment instrument and it's zero-inflation! It means, inflation can't "eat" your money if you invest it in gold. As we know, money keeps devaluing in line with the inflation rate's change. As an Indonesian, I still remember when I was in elementary school, I can buy four candies with 100 rupiahs. Now, I think we all know that we can't afford candy at such price.

Some says that gold keeps moving up when the rate of inflation rises as well. Look at the graphic below! We can see that the price of gold keeps rising year on year.

But, the price is always fluctuating actually. And based on the latest data (March 22nd) by AGEA, gold touches UDS 1613 per troy ounce.

There's one certain thing you have to know. "Troy ounce" is a international standard unit to measure the weight of gold. In Indonesia, "gram" is the standard unit to measure it and here is the formula for converting Troy Ounce to Gram: 1 Troy Ounce is equal to (approximately) 31 grams. Let's consider the price of gold is USD 1.600 per troy ounce or USD 1600 for 31 grams. If USD 1 = IDR 9700, then it will be IDR 500645 per gram.

And what are the types of traded gold?

1. Dinar gold. It's the most expensive type in Indonesia.
2. Gold bar

3. Gold medal.

Does Islam let us to trade gold? YES, of course!

Islam definitely forbids us to "touch" interest (it's often called riba). Riba isn't involved in gold and forex trading, but islam will ban us to trade them if we don't receive the object in cash. Sounds simple but it's not that simple. For all moslem in whole world, all kinds of investment always have risk; economic risk and religion one.

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SPAIN RECESSION AND THE AFFECTION ON RUPIAH

"With great unemployment rate, comes great recession. With great recession, comes great depression". 

Spain is really sinking in great recession. People say no to the government's policy that let Bankia loose from government's hand. It really makes a great impact, EUR/USD is 1.2343 this morning (Indonesia Time Zone). Well, Spain, Ireland, and Portugal depend on Germany and other great EUROPEAN countries for helping  them to get out of this crisis.

Indonesia sense a hardship, too, related to EURO crisis. Indonesia worry about the influence of Euro crisis to China and Japan. As we know, China and Japan is Indonesia main export destination, so Indonesia really consider this. But Suryo B Sulistio said that Indonesia didn't have to worry about Euro crisis because Indonesia has little export value to Europe. On the contrary, Rupiah keeps depressed against USD (according to BI: USD/IDR Rp 9.565,00 May 31st 2012). It is because, the debt crisis in Europe makes Indonesia-Europe trading value falls.

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