January 6, 2011
We recently received a great question from a reader, Chuck, who asked, “Simon, I’m going to HK in 10 days to open a bank account, and I know there are options to do this in several foreign currencies. What foreign currency would you recommend to hold over the longer term?”
I could never make a personal recommendation as I’m not a financial advisor, nor do I know the details of your situation. But let’s review the options.
First off, Hong Kong is an excellent place to bank. One of the best in the world, in my opinion… and I say that as someone who keeps a lot of money in Hong Kong. Why? Because the banks are strong, stable, innovative, and well-capitalized.
I have far fewer concerns about a bank going under in Hong Kong than I do in the US or Europe. And in Hong Kong, with just a few clicks, I can move money into gold or any number of currencies.
It’s quite easy to open an account in US dollars (USD) in Hong Kong. Now, the downsides of holding USD are clear– continued expansion of the Federal Reserve’s balance sheet coupled with excessive spending habits of the US government make it an increasingly worthless piece of paper in the long run.