Everyone is aware of the budget deficit in the U.S. Last year, the deficit was $1.3 trillion, and we are certainly on track to at least match that deficit in 2012. The U.S. debt-to-gross-domestic-product (GDP) level is at 100% —one dollar of debt for every dollar of revenue generated—and climbing.
With this in mind, investors should think of diversifying some of their money out of U.S. dollars, and owning countries that have not printed money and the deficits of which are not as large as countries like the U.S.
Australia and Canada are two countries that have their budget houses in order. Australia’s latest debt-to-GDP is just over 26%, which means the country has $0.26 of debt for every dollar of revenue generated. Like a household, this is clearly a healthy level of debt that can be paid off, even if the economy contracts.
In Canada, the debt-to-GDP is roughly over 67%, which means the country has $0.67 of debt for every dollar of revenue generated. These are numbers that are not as low as Australia’s numbers, but clearly a more sustainable level than the U.S.
Should economic growth continue to worsen around the world, countries like Australia and Canada will be in a better position to ride out the bad times. Naturally, their currencies will strengthen as a consequence.
Also, because they are healthier countries in general, even if economic growth picks up, these countries will continue to attract investors to their currencies, because they are in much better fiscal shape than the U.S.
Not only are these currencies safer investments, but these countries are also home to some of the largest gold mining stocks in the world.
We at Penny Stock Detectives believe that the bull market in gold bullion and gold mining stocks still has a long way to run. Thus far in 2012, gold bullion has been one of the best performing asset classes in the stock market. Although the gold mining stocks have participated to a limited extent, gold mining stocks are still undervalued compared to the price of gold bullion. for more details, visit : /internet-for-new-stock-newsletters/
Gold mining stocks are roughly pricing in a longer-term price of gold bullion between $1,300 and $1,400. This means that, if gold bullion continues to rise past $2,000, this will make gold mining stocks even more inexpensive.
Penny Stock Detectives strongly believe that, if gold bullion rises above $2,000, it will attract new investor money into gold mining stocks. When new investors look to invest in the gold sector, they can either buy gold bullion at $2,000 or the gold mining stocks that are trading at levels that reflect gold bullion at $1,300-$1,400. We think new investors will choose gold mining stocks.
With their economic houses in better shape than most countries in the world, the Australian and Canadian dollars are currencies that Penny Stock Detectives believes an investor should own. Home to some of the largest gold mining stocks in the world, investors can own these strong currencies by owning gold mining stocks, which are trading at a discount to the current price of gold bullion. Protection with great upside.