Wednesday, September 5, 2012

US Dollar Index Clobbered on Leaked ECB Plan

The U.S. dollar and U.S. Dollar Index are getting hit hard today after the "leak" of the plan by the ECB to acquire an unlimited number of bond which mature in 0-3 years.

Ignorant reporters continue to imply there is uncertainty because Germany opposes the plan, but over and over again that has been the positioning of Chancellor Angela Merkel, who attempts to make it look like she's fighting it till the bitter end before caving at the last moment. There is no doubt this plan will go forward officially on Thursday.

This will probably appear to stabilize Europe over the short- to mid-term, but that's not even a guarantee in the contracting economy of the euro zone. It would be more accurate to say that is what will happen in the minds of the people of the world, even though absolutely nothing is being done to address the underlying issues, which is primarily the reduction of government spending and changing of financially parasitic lifestyles of the people living in socialist Europe.

Until that is done, nothing will be changed which will have a beneficially long term effect.

As for the U.S. dollar, it was trading down against the euro, with the euro climbing to 1.2603 against the greenback, a gain of 0.0036 as of 12:16 EST. The U.S. Dollar Index was down to 81.21.

Thursday, July 12, 2012

Time to Buy Australian Dollar?

It may be a very good time to invest in the Australian dollar, as it's coming off a recent low and has rebounded in a way that looks very sustainable.

The last time the Aussie dollar came off a low in the latter part of 2008, it almost doubled in value.

Another reason to invest in the Australian dollar at this time is it's out of favor at this time, which means it hasn't participated in a huge run up as happens once traders take notice of a currency moving up in value. At that time all you're doing is chasing the price. Better to get in before the crowd discovers it.

Added together, the price of the Aussie dollar is inexpensive, starting to sustainably trend upwards, and is still out of favor with traders and investors.

Since the currency is still hated, and the upwards trend solidly in place, it's the perfect time to get into the currency.

As for the Aussie dollar itself, it pays out 3.7 percent interest at this time, the leader among of all the major currencies.

One of the best ways to play the Australian dollar is via the CurrencyShares Australia Dollar Trust (FXA). It pays out a monthly dividend valued at 3.7 percent.

Wednesday, July 11, 2012

U.S. Dollar Rallies on Nothing

The US Dollar Index jumped 30 points right after the release of the minutes of the last FOMC meeting, based upon nothing but the confirmation of what had already been communicated by the FOMC after its latest meeting.

Apparently the market was looking for something that was said in the meeting regarding the implementing of more stimulus measures, even though it has already been stated that in the near term it's not likely to happen, although the Federal Reserve stands ready if the economy continues to weaken.

That also suggests investors believe the economy is approaching that point, and are looking for some clue as to when quantitative easing will resume.

There is no doubt there will be a QE3, it's just a matter of when, not if. But leery investors are wanting a more definitive statement and time frame than is currently being offered by the FOMC.

At the meeting the Federal Reserve announced interesting rates would remain at 0.25 percent into 2014, and that Operation Twist would be extended. Investors were hoping for more, but didn't get it, and apparently were hoping to find clues in the minutes that would suggest more is in the wings.

But I'm not sure what more can be said than it stands ready to do what it needs if the economy doesn't recover.

It appears investors and the Fed have two different views as to the health of the economy, with some investors thinking it's past time for more intervention, even though it has done nothing to help in the past.

More than likely the consequence of all of this will be for investors to remain skittish and on the sidelines until hints toward further stimulus are offered, or until true economic growth returns.

That's good news - at least temporarily - for the strength of the U.S. dollar.

Tuesday, May 15, 2012

Jim Rogers on U.S. Dollar

Talking to Steve Forbes at, Jim Rogers weighed in on the U.S. dollar and why he's holding it at this time, as well as why he might even acquire more of the greenback sometime soon.

It's interesting to listen to Jim Rogers chat up the U.S. dollar, as over the long term he has called it a "flawed" currency in the past, and continues to believe that to be the case.

Even so, he is invested in the dollar, and has been since around early 2011.

When asked if the reasoning behind investing in the U.S. dollar was because it's in a "bear market rally?," Rogers said this:

It’s a bear market rally, yes, in my view. Although when I walk out of here, I may buy more. No, I don’t see it as anything more than a bear market rally. But I own several currencies around the world. There may be a time ... in the foreseeable future, when all of us are going to be getting rid of our paper money, because it’s being debased all over the world. One reason I own the dollar is because everybody’s panicked about the debasement of these other currencies. Paper money is suspect.
Also being an expert on gold, Rogers knows we're in a gold correction at this time, and expects it to drop more before recovering to continue its upward price run.

That means for a season the U.S. dollar will continue to flourish, as it has little in the way of competitors in the short term, making it the preferred place of safety for investors, as the euro continues to plunge in value based upon the sovereign debt crisis in Europe.

Friday, March 2, 2012

Yield for Dollar, Yen Could Push Dollar Lower

Several factors are currently in play concerning the dollar, yen yield, which could push the U.S. dollar down in the short term.

With a wider spread the Japanese will invest in the U.S. dollar, while a shrinking spread causes them to place their money elsewhere.

On Thursday, March 1, the spread between U.S. and Japanese note yields (yen against the dollar) hit 0.29 percentage point, the widest it has been since August 2011.

The risk for the dollar, yen correlation is the low yields in the U.S., which are expected to remain in place for some time, combined with a possible upswing in the economy of Japan.

That combination, could, in the short term, cause the yield spread to shrink.

Thursday, March 1, 2012

U.S. Dollar Trades Mixed Against Major Currencies

A day after Ben Bernanke helped bolster the strength of the U.S. dollar by not mentioning any more plans for quantitative easing, the greenback fell back to earth, trading mixed against other major currencies.

Most of the important economic news centered on unemployment, which in the United States remained level, dropping only slightly, while unemployment in the Euro zone climbed to its highest level since the introduction of the Euro as a currency in 1999.

Of the 17 countries using the Euro as currency, unemployment plunged to 10.7 percent for January, pushing it down against the dollar to $1.3316 in the latter part of the trading day.

The British pound climbed against the U.S. dollar from $1.5925 to $1.5953.

Other currencies strengthening against the dollar were the yen and the Canadian dollar. The dollar fell from 81.18 yen to 81.08, and from 98.89 Canadian cents to 98.57 Canadian cents.

Against the Swiss franc the U.S. dollar climbed from 0.9039 to 0.9059.

Friday, February 17, 2012

Jim Rogers Sees More Currency Turmoil

In an interview with CNBC today, billionaire commodity bull and expert Jim Rogers said he sees continual turmoil in the currency markets, although in the short term he has positions in U.S. dollars, renminbi and euros.

This is the result of the horrendous decisions of the Federal Reserve and other central banks around the world to continue to "stimulate" the economy with money created out of thin air, which is extremely disruptive to the market over time.

Rogers says he sees the renminbi possibly tripling over the next ten to twenty years. He said, "I own the renminbi. Every time I can, I buy more renminbi. I expect the renminbi to double or triple in the next decade or two." He did say he doesn't have a position in the British pound at this time. Rogers added he owns no U.S. stocks either.

As for his positions in gold, silver and other precious metals, Rogers continues to say he won't be selling any of those. "The way to protect yourself at a time like that, historically anyway, has been to own real assets. Those are my longs, and currencies," said Rogers.

Rogers recommends for investors to monitor the currencies of the world. When quantitative easy results in increasing currency turmoil, he says that's the time to buy commodities.

He concludes that as the near the latter part of this decade it's doubtful very many investors will hold paper money, as it's increasingly falling out of favor as debasement pushes the value down.

Wednesday, February 15, 2012

Time to Start Saving Nickels?

Word has been circulating for some time that the cost of making pennies and nickels in the United States has risen to the point where it costs over double the value of each coin to make.

For the penny, it costs 2.4 cents to make, and for the nickel, it costs approximately 11.2 cents to make, as of 2011. Both of those numbers include labor and materials.

As for the nickel, the metals used to make them - 25 percent nickel and 75 percent copper, costs at this time about 6 cents a coin, with expectations that will rise as commodity prices continue to rise.

The reason why the government is looking to change the metal mix now is the cost of making them will rise as the Federal Reserve continues to print money and the Obama administration and Congress refuse to cut back on spending.

That of course means the price of copper and nickel will jump, as will the value of nickels.

Like the silver in coins being dropped in 1964, it could be an important part of a portfolio to include nickels.

At this point in time we aren't allowed to melt them down to get the metals from them, but there will be plenty of coin dealers in the future ready to acquire the nickels as they go up in value because of the rising value of copper and nickel.

Places to acquire larger numbers of nickels, are from banks, vending machine owners, and casinos. With casinos you'll have to act like a gambler looking to put some serious coin in the nickel slots.

For the bank, keep in mind you'll probably be charged a premium if you ask for too many at a time, as they are charged for each roll they sell you. Buy a lot at a time and they'll pass those costs onto you.