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Thread: Foreign government bonds?

  1. #1

    Foreign government bonds?

    I don't hear Schiff or other Austrians talk too much about buying foreign interest paying bonds. Does anyone think this may be a good idea, just to diversify a little and also get a little interest which precious metals don't provide? For example Canadian or Chinese bonds paying interest in their local currencies might be a decent investment.

    Does anyone have any experience in doing this?

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  3. #2
    I've bought foreign corporates before, but not foreign gov'ts..

    Like most things, I'd approach it in the form of some kind of indexed investment like BWX or BWZ, and not individually, unless you really want to do a bunch of exhaustive research

  4. #3
    Would you hold the bonds until they mature or possibly sell them before they mature? If you do not intend to keep a bond until it matures you face the risk that if the intetest rates on future bonds goes up, you will have to sell yours at a loss. If you keep it until maturity then this is not a risk. You do face two other risks. One is currency risk. If the value of the dollar against the other currency goes up or down you may gain or lose money on your bond since you will ultimately want to change the money back into dollars to spend. Second is inflation risk. Will the bond give you a rate of return greater than the expected rate of inflation between now and the time you sell/ redeem it?
    Just some things to consider.
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