Out at the peak

Sunday, June 04, 2006

Betting on Euros

Ben's Money and Metals discussions have heated up. Below was my recent input.

I'm in the minority here with big bets on the Euro (however, my biggest bets are on CAD and CanRoys). I estimate my Euro bets are twice as big as my PM bets.

Here are my views on the Euro:
Most of us agree that the USD will faulter at some point. Serious PM bugs want all unbacked paper currencies to fail, and logic might conclude that is what should happen.

I believe the marketplace is setting the stage for the Euro to be the next world's [paper] reserve. Pre-war Iraq attempted to switch to Petroeuros. Syria switched their savings to Euros. The Middle East in general has large European accounts. Iran is trying to switch to Oil Bourse (which will result in higher demand for the Euro). Venezula is proposing Petroeuros too. I believe this is a beginning of a shift not to be taken lightly.

People might argue that the fundamentals of the Euro are worse than the USD, but right now the psychology of world markets point to a fear of USD. We have all witnessed psychology overriding most market factors.

When USD crashes, perhaps it will take the other major currencies with it. But what damage does that really do? Only then emerging market currencies will be worth more. No one would consider that a crash. I believe if we have a currency crash, there will be one faulter or different tiers. USD would be it or faulter more than others and so I shall win my bet.

If I'm wrong and USD prevails over CAD, EUR, and JPY, then I should have just sticked to T-Bills.

Russia is on the right track for trading in gold. I can understand other countries hesitating to do this because of the high volatility of PMs (not to mention oil itself).

6 Comments:

  • The Euro lost 2.5 percent for the week with loses every day for the past 5 days.

    You may see a bounce. But with our Feds determenation to raise rate I pray that it is only a dead cat bounce.

    We can't have the fed raising the discount rates and the dollar collasping at the same time.

    By Blogger Dogcrap Green, at 3:50 PM  

  • hey out at the peak, do you have an ft
    id/pw. there is an interesting article in subscription section titled
    Discrepancies in US accounts hide black hole
    i can post it here if you dont mind a long post.

    By Blogger panicearly, at 8:00 PM  

  • Dogcrap: My Euros (months old) are still in green territory, but admittedly not by much. For conservative investors, they should wait until CPI is contained before jumping on any foreign investment.

    Panicearly: I do not have a FT account. I wouldn't mind a long post, but I rather not host copyrighted material. A link would be great if manageable. Sounds scary for the USD.

    By Blogger Out at the peak, at 1:44 AM  

  • By Blogger real1, at 1:21 PM  

  • That's cool. I have a sizeable bet on gold too.

    Update on Euros: it pulled away and has been getting in greener territory.

    By Blogger Out at the peak, at 9:46 AM  

  • I watch them Euros every day.

    It was sad to see we couldn't break .80

    By Blogger Dogcrap Green, at 4:26 PM  

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