Major Global Businesses unsure of the world’s political and economic future are now sitting on mountains of cash. Some seeking a return on this money are starting to act as Banks. They are investing into unconnected companies, where they can see potential for the future. These receiving companies are frequently in the next generation technologies, such as Bio-Medical, Bio-Technical, Gene-Manipulation, Nano technology and such futuristic research that is way beyond my comprehension. However some of these Global businesses have been doing more mundane things such as increasing dividends, which is very nice for income seekers, and some others have been putting their money into bullion and Gold mining. Samsung is such a company. So why Gold? They must be questioning the skills of Western Politicians and the power of Q.E. to turn these economies around, and whether the American dollar has the strength to remain as the reserve currency.
Well, for me as a small private investor it raises yet again the question as to where is a safe place for my money? Gilt funds have been a good place for a considerable period of time, but with gilt yields as low as they are now, surely a correction must be on the horizon in the not too distant future. The ECB has pledged support for the European Banks and the Mediterranean economies, so if this is believable then Corporate and Strategic Bonds with their yields around 6% become attractive.
Therefore perhaps a move into Corporate and Strategic Bond funds is my next move. This should work as long as the Central Banks continue to keep low interest rates and roll out Q.E. to support the failing Banks and economies. If the markets collapse dramatically then it must be back into cash and continue to maintain some exposure to gold.