Gold at $600 -- Time to Move to Income-Producing Assets? (ETFs: GLD, PID)

Includes: GLD, PID
by: Market Participant

The recent run up for gold to $600 and silver to $12 is a sign of the declining value of federal reserve notes. However, I believe the best response to this decline is not to buy gold, though gold will continue to rise as the dollar weakens.

The problem with gold is that it is a dead asset. It doesn't produce income; it never grows even as it increases in price. Income producing assets give you the benefits of compound interest growth. Gold just sits there, looking shiny. The best investments in the context of weakening dollar are income producing assets that are not dollar denominated.

The easiest way to buy non-dollar income producing securities is to buy shares of Powershares International Dividend Achievers (NASDAQ:PID). I've outlined the case for investing in PID in an earlier article. The growing income stream of non US-dollar dividends from companies that are raising dividends is the best defense against the weakening of the dollar and the general inflation inherent in fiat currencies.

Related fund: streetTRACKS Gold Trust (NYSE: GLD)