Why US employment scenario doesn’t seem to be optimistic?

Over the decades we have all seen a significant shift in the manufacturing activities of United States to China. This can be for various reasons like availability of cheaper labor, lowering of total cost of production and (may be) a deliberate shift of industries from US to reduce its carbon footprint. These changes are so large that it is not easy for a nation to bring back these manufacturing facilities back to US.

Now, after the recession, the US employment picture is so bleak and the unemployment rates are hovering around 9-10%. It suddenly cannot increase the employment opportunities of its citizens, one of the major reasons being that it cannot shift its manufacturing bases back to US. It can prove detrimental in two ways – 1) The amount of investment needed for this is very large and 2) This can increase the cost of production significantly and the sales will fall.

The United States, typically, is between the devil and the dead sea.

Physical Gold Vs Gold ETFs

Should I buy physical gold or invest in gold ETFs (Exchange-Traded Funds)?

Before the ETFs were introduced, we had very little choice. We could either buy jewellery or gold coins and biscuits. The good thing about owning physical gold is that you can hold it in your hand and feel assured about it. A digital contract note may not give you that pleasure. However, there are solid reasons that ETFs are a much better mode of investing in gold. One, it saves you from the dangers associated with owning physical gold. Your gold ETF cannot be robbed. Secondly, there is no scope for getting duped by a jeweler. Gold ETFs do guarantee the purity of the gold. Further, physical gold is taxable under the wealth tax law, whereas units of gold ETFs are not. Also, the ETFs give you a lot of flexibility since there are basic units starting with one gram. And lastly, such units can be easily exchanged for either cash or the underlying gold itself. And the prices they offer are pretty much in sync with the ruling market price of gold. Given all these reas ons, we believe it is wiser to invest in gold ETFs than in physical gold.

Source: Equitymaster