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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