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

Composite Index yesterday closed only slightly higher at 0.21 percent at 2785.79, amid rebound regional exchanges. Panin Securities research analyst Purwoko Sartono see the index still not able to get out of the pattern of consolidation in the short term.

“Today we estimate will still be moving JCI fluctuate with the range of 2775-2804 support-resistance,” he said.

He recommended the stocks of consumer goods and the mining sector can be an option for short-term trading.

Because do not have savings, they can not invest. Unable to invest, they remain poor. Rings like this are often called the poverty trap.

Therefore, according to this theory, a way out of poverty trap is to bring in investment from outside the community itself. This means that need foreign investment.

With the entry of foreign investment, increase revenue opportunities and out of poverty may increase. Another completion to exit the poverty trap is through family planning.

Families in poor countries usually have many children. As a result, consumption is too high, so nothing is saved. With family planning, expenses for children can be reduced.

In addition, parents can be more free to work to get out of poverty. Then, there will be savings, and savings can be used for investment, so get out of poverty.

Another theory says that an economy remains poor because of society’s purchasing power is low. They do not dare produce in large quantities, because they know their production will not be sold in their economy. Although large populations, according to this theory, poverty causes limitations in the domestic market.

So, the solution is to export, domestic production is sold to other countries whose economies have been advanced. Country called the “Asian tigers” (South Korea, Hong Kong, Taiwan, and Singapore) is often called this policy has done three simultaneously.

In the 1980s, the world marveled at the rapid progress clucking in their economy. Since then, many countries that want to repeat the success cases of four Asian tigers, namely family planning, foreign investment and exports.

Many developing countries, including Indonesia, and has succeeded for the planning. And family programs, there is a trend of foreign investment and exports are considered famous in the economic development of developing countries.

Countries that have advanced developing countries were often taught about the importance of foreign investment and exports. They often say they want to help developing countries, so they make an investment in developing countries and encourage exports from developing countries.

Approximately 30 years have passed since the emergence of admiration at the success of the four Asian tigers. Now the question arises, is it true of foreign investment and exports increase the national income? In macroeconomics, there is a very famous formula, namely that the national income equal to the sum of consumption (domestic), investment (domestic), government spending, and exports minus imports.

Therefore, it is clear according to this formula, that investment and exports to increase national income. But in the macro economy, we also learn, that there are two kinds of measuring national income. First is the gross national product (gross national product / gross national product).

This concept of adding up the revenues received all Indonesian citizens in a given period (usually a year), did not view their stay in Indonesia or other countries. The concept of GNP does not include income foreigners working in Indonesia. The second concept is the gross domestic product (gross domestic product / GDP).

This concept of adding the incomes of all residents living in Indonesia, did not view the citizens. Thus, the concept of GDP includes the income earned by foreigners who work in Indonesia.

Moreover, GDP does not include the income of Indonesian citizens who work in other countries. If not many foreigners working in Indonesia, and not many Indonesian people to work in another country, measured by the two concepts would produce similar numbers.

However, with increasing foreign investment and foreigners working in Indonesia, GDP could be bigger than the GNP. This means that foreign investment would increase GDP, but not necessarily increase the GNP. Foreign investment can increase the GNP, if the investment was to create a large revenue for the Indonesian people.

What if the foreign investment it made in export-oriented activities? The impact on GDP would be even greater, because the increase in exports means that the increase in national income, especially when measured by GDP.

However, the impact on GNP is not necessarily large, depending on whether the export activity was able to increase incomes in the country of Indonesia. So, if the amount of foreign investment can be used as an indicator of the success of our economic development?

The answer depends on how we measure the national income. If we measure the national income with the concept of GDP, foreign investment would increase the national income. However, if national income is measured by GNP, the total foreign investment does not necessarily have a significant impact on national income.

New foreign investments have a significant impact when an Indonesian citizen who lives in Indonesia enjoy most of the foreign investment. The difference in meaning of foreign investment will be greater when foreign investment in export-oriented.

Besides differences in measurement concepts of national income (GNP or GDP), the increase in exports also means that goods produced in Indonesia, more and more into international markets, which were sold internationally and is usually much more expensive than the domestic market.

However, income of Indonesian citizens are often not able to follow the international price. Even so, a citizen of Indonesia has to buy Indonesia’s production with international prices. This is the phenomenon of “global consumers with local revenues.” Consequently, they could not afford the production of Indonesia.

Furthermore, products sold in Indonesia is more bad production quality, so it can be sold more cheaply. However, we do not need anti-foreign investment and export promotion. We still need foreign investment and increased exports.

However, we need to remember that foreign investment and export promotion is not the belle of our development. The more advanced countries to invest in Indonesia because they see a profitable business opportunities for them, not because they want to help us.

They want Indonesia to increase exports not because they want to help us, but because they want to get cheap goods. It is time for us to think clearly in response to foreign investment and increase exports.

It’s not the time to have antipathy to foreign investment and increase exports. No time anymore to believe all that foreign investment and increased exports would increase our revenue.

Indeed, be difficult to make a decision. But, that’s the challenge. Currently, we and many other countries in the world, more often using GDP. Every three months we reported GDP growth. Maybe, it’s time, once every three months, we also reported the development of the GNP.