Comments on: Peter Schiff: Dollar Is The Next Bubble To Collapse

By: Donnie

Donnie — Mon, 02 Mar 2009 14:46:10 +0000

As a small-time investor without the know-how to invest directly in a foreign market (and without the funds to do so economically if I did know how), wouldn’t it be almost the same thing to invest in an ETF that directly invests in a foreign market?

For example, if I wanted to invest in Canada, but I don’t have the ability to buy stocks on the TSE, wouldn’t a fund like EWC do the same thing? And a fund like FXC would be like holding Canadian dollars.

And you could do the same thing with many countries.

Or does anyone have a better idea?

By: Mike

Mike — Sat, 14 Feb 2009 13:28:31 +0000

Interesting that other than a veiled reference to “fiscally conservative” EU countries, no one here is talking about a very key component of what makes for a reserve currency: the country involved has to live within its means. What China and Japan have in common is that they consume less than they produce; and the EU, though it isn’t quite there comes a lot closer than the US does. And all three represent huge populations, and in the case of Japan and the EU, relatively wealthy populations.

And even aside from the issue of which currency will be the “reserve” currency, the USD certainly can, in theory, decline against other currencies even if they are from economies too small to qualify them as a “reserve” currency. There is no inherent reason that over the next 10 years the USD can’t decline against the Australian dollar, the Canadian dollar, the Swiss Franc, the Won, and (if HK changes its peg) the HK dollar, even though none of these will become the reserve currency. And if the USD does decline against these currencies, then obviously an American would be better off holding these currencies than holding the USD.

By: MoneyEnergy

MoneyEnergy — Thu, 12 Feb 2009 02:19:19 +0000

Do you guys know Jeff Rubin of CIBC Markets Canada? He’s a major economy analyst, kind of a mini-Canadian-business-celebrity who is seriously bullish on oil going forward. The talk in Canada is just when the heck our loonie is finally going to get the attention it deserves and when oil will stabilize back above $55/barrel, because that’s the number needed to keep profitability for the oil trusts.

By: MoneyEnergy

MoneyEnergy — Thu, 12 Feb 2009 02:15:42 +0000

LivingoffDividends,

I don’t know much about the Australian dollar except that its economy is similar to Canada’s, and that the AUS seems to fare worse against the USD than the loonie does. These past few months the AUS has always dropped more than the loonie, don’t know why. Of course, Canada is a seriously major exporter of oil to the US (another fact not mentioned often in the media, which puts all the attention on Venezuela and the middle east). I don’t think Australia exports oil, or at least not much.

By: Brian McMorris

Brian McMorris — Tue, 10 Feb 2009 23:33:04 +0000

Andrei

Currencies move in unpredictable ways against each other, which is why traders love them so much. But on a longer term basis, it seems to me that Europe is no better off than America where the economic variables are concerned (aging population, lots of social equity costs like national healthcare and pension programs, mature infrastructure, higher cost labor, lack of new natural resources, etc.

The European Union has tried to compensate for its natural weaknesses by requiring all its members to be fiscally conservative. But it is impossible to keep all the sovereign governments with their own constituent demands on the same page. This creates uncertainty around the stability of the EU, which hurts its relative currency valuation.

So, I think both the USD and Euro will be under pressure the next few years, but it is highly unlikely the Euro will pull ahead of where it currently is against the USD (1.30) for any lengthy period of time.