Minyan Mailbag - Fiat Currencies
Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.
Enjoy your insights.. keep up the great work...
I would like to get your opinion on the Australian dollar.
I see (via Everbank World Currency accounts) that I can buy a 3-month CD in Australian dollars that pays 4.18% APY.
I am very worried about the US dollar and consequently hold
gold/silver stocks and some foreign closed end fixed income funds.
I am now looking to take my remaining cash and put it in other
What do you think of the Aussie dollar?
I find it hard to justify saving or investing in ANY paper currency, no matter what the interest rate is. In similar position to yours, I would only be exploring tangible assets, most specifically precious metals. Every cent I own is in gold and silver (except a few nags). It is the ONLY conclusion I can draw.
You note that there is definite yield pickup by investing in Aussie dollars. That will diminish in time as the U.S. raises rates to kill this madness of liquidity surplus. Return on dollars is a non-issue. Interest rates are so low and the tax paid on interest earned makes this a furphy. 50% of nothing is nothing. Capital protection is more the game these days. Real money, mate.
But back to your query... I live here so I love the Aussie dollar. The commodity/primary producer thing is a bit of a misnomer nowadays as we have flogged off most of our mining and agriculture to foreigners during the "strong dollar" policy of Rubin et al. Maybe the kicker won't be as big as usual to our economy but it won't stop the sheeple doing the "usual" trade. For that reason alone it should do well. The carry trade unwind is a sticking point though and a risk not to be dismissed summarily.
We may see 65c on a pre election big dollar spike and I expect we will see a new high for the Aussie in the coming couple years as the dollar heads the way of EVERY fiat currency system in history. Oblivion. I dunno when it will happen, and don't pretend to, but it is INEVITABLE. What makes the dollar any different than the Weimar Reichsmark or the Bezant of centuries ago? Nothing.
I also like the Norwgians due to oil and the sheep-shaggers are going
well too. In fact the Kiwi has been a star lately. Swiss Francs may help also.
Safety first mate... and that means gold/silver for my money (not advice). An ounce of gold will always be an ounce of gold... what about a dollar??
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