Inflation is rising prices of goods and services in general. Inflation could undermine your money. If the assumption of inflation is 15 percent per year, the price of goods & services that are now worth 5 million, will be 10.06 million, or twice in the next 6th year, and 15.3 million or three times in the next 9th year, and so on.

According to severity, there are three types of inflation:
1. Moderate inflation, when inflation rate was just under two digits per year (below 10 percent)
2. Malignant inflation, when inflation rate is in two digits per year (10 percent – 99 percent)
3. Hyper inflation, when inflation rate is in three digits per year (100 percent or more)

If you are not decision makers in government, you probably can not go down the inflation rate. All you can do as individuals, is how you can take advantage of the occurrence of inflation. How do I? I suggest you invest on instruments that will increase rapidly in the event of high inflation. What is it? The Gold.

When Japan invaded China during World War, the Chinese people panic and they rushed in droves so that the price of gold rose gold extraordinary. In Indonesia, in the event of necessity rush at the supermarket on January 8, 1998 (early morning before the Budget announcement by President Suharto in front of the Parliament), the price of gold also jumped directly. In every other two days, gold prices climbed roughly 1.5 times as much. And these prices, though volatile, tend to rise and hold at that time – before finally falling back again when inflation under double digits.

Facts prove, if there is high inflation, gold prices will rise higher than inflation. The higher inflation, higher gold prices. Statistics show that when inflation reached 10 percent, then gold will rise 13 percent. If inflation is 20 percent, then gold will rise 30 percent. But when inflation is 100 percent, then your gold will go up 200 percent. This is why you should consider investing in gold. This is because gold is an trusted investment as an antidote to inflation. The higher inflation rate, the better will usually increase the value of your gold. However, worth noting that the price of gold will tend to a constant when the inflation rate low, and even tend to slightly decrease the rate of inflation below double digits. So, gold will be good only when there is inflation moderate (two digits), and it would be great if there is hyper inflation (three digits).

Gold Investment

Gold is available in several options. Some of the best known of them is jewelry gold and bullion gold. The other choice is gold coin.

When you invest in gold for the short term, usually will be difficult to get a profit if the shape of jewelry gold. This is because if you come to the store and buy jewelry gold, you have to pay the price of gold plus the cost of manufacture. Well, when one day you sell it back, then the store would not want to pay the cost of manufacture of jewelry gold. He will only pay the price of gold alone. In fact, really lucky if the store will accept your jewelry gold. Some stores sometimes refused the sale of jewelry gold from the public. The causes can vary. One of them is because they fear that the jewelry gold does not sell anymore when sold. So, even if they buy again, they have to melt the gold.

Therefore, investing in jewelry gold better off if stored for long term. Because usually your gold price has gone up a lot than when you bought it.

Jewelry gold is available in various carat, of which 18-24 carats. For investment, it would be nice if you choose 24-carat jewelry gold. This is because the possibility of jewelry gold can be sold back much larger than the 18 carat. Once again, the investments in the form of jewelry gold will usually only provide a favorable outcome in the long term, not short term.

Gold investment which I think is good enough investment in the form of gold bullion (precious metal gold). Gold was good enough when used as an investment, and whoever does not deny that gold bullion is more easy to resell. In addition, bullion gold doesn’t need the cost of manufacture as well as jewelry gold. Therefore, if you want to invest in gold, it would not hurt you to consider investing in gold bullion.

State Foreign Exchange Administration Bureau (SAFE) does not give any explanation to such exchange will be allocated. Government of China has not confirmed will change the type of asset allocation and currency to be used.

Previously, the Government of China had announced that their investments in Europe a key market for the fund is currently investing their wealth. The economists estimate, China invested 65 percent-70 percent of their funds in the form of United States dollars, while 20 percent-25 percent of the rest in euros.

“China will adopt a prudent and active principles in managing their wealth,” SAFE said in his statement on the website.

Description is made when Foreign Minister Qin Gang said that the government need not be too worried about the debt they hold. The statement is a comment on the statement made by the U.S. Senate, who asked Obama and his cabinet to check and manage the risks of U.S. foreign debt.

“It should not be politicized,” said Qin. He affirmed that anyone who sells bonds must comply with prevailing market

In trading Thursday (10/06/2010), the Dow Jones index closed sharply higher to 273.28 points (2.76%) to the level of 10172.53. Index Standard & Poor’s 500 climbed 31.15 points (2.95%) to a level of 1086.84 and the Nasdaq gained 59.86 points (2.77%) to a level of 2218.71.

Energy sector shares led the strengthening of the S & P energy index rose 4.9% was recorded. Shares of British oil company, BP Plc, which had slumped sharply finally rebounded 12.3%, Exxon Mobil rose 3.10%.

Energy stocks are also driven by rising crude oil prices to above U.S. $ 75 per barrel. Light, sweet crude oil contract rose 1.5% to a record level of U.S. $ 75.48 per barrel.

The positive sentiment came from Europe namely after Spain was able to sell bonds worth U.S. $ 3.9 billion euro, with investor interest that looks large enough to be a positive sign. This makes the euro’s position improved to 1.2% and traded above 1.21 dollars.

Good news also came from China which recorded an increase in exports up 50% during May compared to last year. It assuage investor fears the crisis will impact Europe to the global growth.

“Bid bond running good and strong Spanish China exports very profitable. You get some good news for some big stocks driving the market,” said Brian Lazorishak, Chase Investment Counsel’s portfolio manager, as quoted from Reuters, Friday (11/06/2010).

But trade is not running too busy with transactions in the New York Stock Exchange reached 9.16 billion shares, below average last year reached 9.65 billion.

“The performance of developing countries improved in the era of multi-polar growth is very encouraging,” he said.

World Bank predicts world GDP will rise by between 3.1 to 3.3 percent in 2010 and 2011, then rose to the range of 3.2 to 3.6 percent in 2012. Economies of developing countries is estimated to grow between 5 to 6.1 per cent per annum in 2010-2012, while developed countries only around 2 to 2.3 percent in 2010.

Justin emphasized, so that recovery can continue to run, developed countries must be able to take the opportunities offered by growth in developing countries.

Meanwhile, the World Bank’s Global Macroeconomic Manager Andrew Burns said developing countries are not immune to the impact of the crisis. Yet for the world economy continues to go well, developing countries are expected to continue to focus on growth strategies, simplify the way businesses and strategies for more efficient spending.

“Their purpose is to ensure that the investors can distinguish between them with a risk of risks in developed countries,” he added.