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North American Energy Partners Inc. Message Board

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  • chemaes44 chemaes44 Jul 18, 2011 11:08 AM Flag

    The Dollar

    You have to look at the constituents of the US dollar.

    There's been some discussion on the Euro (makes up about 55%). I think all signs point to deterioration and death by a thousand paper cuts. The union will drag it out with piece meal solutions until they can't band aid it anymore. So slow drift down. dollar positive.

    However, although there will be fleeing from the Euro, recent evidence says the swiss franc has become a major alternative with constant inflows.. Check out the CHF/USD cross. The franc makes up 5% of the dollar index and the franc is exploding upward. negative for the US dollar.

    The Sterling (about 12%) has strenghtened since mid last year and you have to assume a break down of the Euro causes money not headed to the franc to head to the pound. negative for the US dollar.

    The Yen (about 12%) after just having the tsunami figures to have some strength due to having to rebuild infrastructure which should allow it to get our of the rut it's been in for a few decades. negative for the US dollar.

    One canadian dollar now gets you 1.04 US dollars and as a resource economy they say our dollar should remain at our above parity for some time due to our resources and strong banking. It seems as the US banks continue to tank and the daisy chain effects on banks in the euro takes hold, that canadian banks might become even more attractive. Who ever thought regulation up the wazoo would ever come in handy, eh! negative for the US dollar.

    The wildcard is that the chinese have entered the bond market and the last bit of information i read is that uptake of their bonds has been robust. The Yuan (Renmimbi) whatever you want to call it is sure to have more draw power for funds than the US dollar. latest gdp last week was still 7%. Although it isn't part of the US dollar index it is something to offer as an alternative to US dollar inflows. negative for the dollar.

    Asked a friend to look into some beach property for us in Brazil. He said we're too late the house prices are going through the roof because the economy is taking off to the stars. Case in point, when several emerging economies around the world can offer growth rates above 7% to the US 2%, but 1% if bush tax cuts expire, why put money in the US? These economies make it negative for the dollar.

    US jobs aren't coming back. GBP will stay around 2% max. Housing inventory will take years to work off. The banking sector in the US sector has been in steady decline for the last few months recently. check charts of JP, goldman, BofA, citi etc. I can't see anything that would make one secure about putting money in the US.

    However if the US pulls out of afghanistan and iraq, raises taxes, takes an axe to the entitlements programs etc, there may be a chance. The thing is I could go outside and there is a chance of lighting striking me on a cloudless day. All those things seem unlikely to come together for the US. What is sad is canada is tied to the US. Something like 80% of our export is US, so as you go, so should we.

    This is the big macro picture as I see it, but my lady says I'm blind. The US dollar will have brief bounces up, but down is the trend. IMF calls for US dollar to still loose about 30% of its value from here.

    see ya in brazil.
    chem

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    • This is a great discussion here, I'm loving it but I am also slammed right now but I wanted to shout out regarding the Franc. As chem mentioned $$ has been flowing into the Swiss Franc and lately, a lot. This is key, as well as the price of gold (today hit $1600) and silver as well as other commods. So I think this is key to discuss. I will log on later to discuss and read the rest but so far awesome thoughts and discussions!

      • 1 Reply to commodityypro
      • Oh man, my typo's are killing me.

        One glaring one: US GDP 2% and bush tax cuts expiring causes it to go to 1%..ERROR...sorry..keeping bush tax cuts keeps GDP at 2% and increasing taxes on wealthiest americans beyond bush tax cuts supposedly will eat away GDP ...

        Commo is right on with gold and silver..Because you all see me write so much about silver, I took for granted that you'd know silver and gold was another spot to place your money.

        On where I'd put assets when dollar is devaluing, remember I'm in Canada. My wealth is not deteriorating. Letting my money just sit in a bank, without investing, causes my wealth to go up against americans wealth.

        However, I do invest. My main things right now are silver and candian bond etf's. The bonds have been on a tear since beginning of may. On silver, I'm in double long silver etf and slw. My longest time horizon is 2-3 months. I re-evaluate my holdings everyday because this is how I live.

        A note on silver, I posted something on SLW board after drinking...bad me...there is a target at 40.80 that needs to be surpassed for 42.24 to become next leg up. When silver hit 40.72 earlier yesterday I may have mistakenly assumed $40.80 had fallen since only pennies separate them. $40.80 provided strong resistance... we have to watch this morning.

        I think I posted here several days ago, I see 1650 gold. I still see it. that price gold corresponds to $42.24 silver I think.

        If I were an american I guess I would be putting money in gold and silver; staying away from gov bonds but selectively finding corporate bonds; looking at agriculture and potash; looking at multinational companies who'd set up significant stakes in some of those emerging economies that are rapidly growing ..so infrastructure exporters in agriculture, mining and drilling.

        The good ole USA won't be what it use to be. You guys are in between a rock and a hard place. the politicians won;t have the guts to offend the sensibilities of the realty-tv intellectuals and super-hero movie junkies. The hard things that need to be done won't be done.

    • So Chem:

      Besides investing in commodities and strong economic foreign countries' beach houses, what other investment are you doing to protect your wealth with the dollar projected to devalue in the future?

 
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