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Don't Be Decimated by a Declining Dollar

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September 09, 2010 – Comments (0)

Bearish on the dollar, wary of gold, and don't know how to preserve the value of your savings. This week's Global View column makes the case for a basket of emerging markets currencies:

Clearly, investors have far more confidence in gold today than they do in the fundamentals of the United States, Europe, Japan, China, Brazil, and India. After all, gold, unlike the United States, Europe, and Japan, isn't overleveraged with dim growth prospects. And unlike China, Brazil, and India, gold doesn't have to conquer the problems of cronyism, corruption, insufficient infrastructure, and a widening divide between the rich and the poor.

Given the track records in these countries, that's not necessarily an irrational opinion. That said, while I remain bearish on the dollar, the euro, and the yen, I believe that over the longer term, the emerging world can address the problems facing it today and lead global economic growth over the next decade or longer. If you believe that as well and buy the argument that gold is more currency than commodity, then the variance between the recent performance of gold versus the dollar and emerging market currencies versus the dollar has created an intriguing opportunity.

Read it all by clicking here.

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