Antidote to Dollar Weakness: Swiss Franc, Gold

by: Joe Gelet posted on: July 01, 2008 | about stocks: FXE / FXF / GLD / IAU    
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US-based investors are faced with a falling dollar. Any US-based investment is decaying due to an inflationary monetary policy and debasing of the currency. That translates into less purchasing power at the store and at the pump.

Many have recently been flocking to the Euro and while this strategy has been successful, Elite E Services feels this will be short lived as Europe has its own problems. It is a difficult environment to make any forecasts in FX or any other market, however we believe there are several safe plays that should be added to any portfolio: Gold and the Swiss Franc.

Historically, the Swiss Franc has not declined in value since FX began floating, gaining over 400% against the US Dollar since 1975. Gold is not only a commodity, it is money, and in a global inflationary environment, Gold will retain its value compared to fiat currencies. Gold will outperform other metals and other commodities, while there will be opportunities for profits by being long, will be volatile and subject to violent price movements.

Jim Rogers suggests investing in China, the Chinese Yuan and Taiwan, as China will be the next USA. There is something to be said about China being the next great market but China has many problems that could pose threats to its growth (too many to go into detail).

Peter Schiff recommends also buying Singapore Dollars. There are many trades which we could recommend with confidence, however they need to be traded and watched, and don't work as long term investments. Therefore we can suggest any portfolio currently:

  • Stay cash in high rated banks to avoid bank failures
  • Stay out of stocks, bonds and real estate
  • Get into commodities directly or through commodity funds
  • Add Gold and Swiss Franc (Editor's Note: ETFs which cover these include GLD, IAU and FXF)

 

This article has 5 comments! Add yours below...

Joe Gelet

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This article has 5 comments:

  •  
    GMiki
    Jul 01 11:47 AM
    Smart comments. Have a bit of bullion--silver and/or gold--at home.
  •  
    blink0404
    Jul 01 01:35 PM
    Nice article.
    I'm interested in GLD and wish you had said more an the Chinese Yuan. While China does have problems of its own, the Yuan could be very a good investment through the fall because of the Olympics. I'm curious as to what others think.

    I think you are recommending holding GLD longterm, advice I question because as the Fed takes a stronger stance on the dollar and inflation, gold and oil will go down as a result. If you're still interested in gld long term, I recommend this article on GLD LEAPS: www.greenfaucet.com/tr....
    The GLD LEAPS allow you to hold a gld call until 1/2010 at a lower upfront price, less risk, and a similar profit.
  •  
    Are You
    Kidding?!
    Jul 01 09:10 PM
    My Website
    "US-based investors are faced with a falling dollar."

    I had no idea! Shocking!

    This is one of the worst articles I've ever seen on this site, which hosts quite a few terrible commentaries.

    Let's get Mark Anthony's input, quick!
  •  
    User 30121
    Jul 02 03:59 PM
    Joe: Nice piece, but why not SUGGEST readers contemplate PURCHASING precious metals (gold and silver) and taking PHYSICAL OWNERSHIP of same??????

    This ETF stuff...what does it really mean? ZIP! Empty promises, my friend.

    Do like GMiki, JT, me and a horde of others have learned to do....BUY it, HOLD it, and WATCH THE CARNAGE, and wait for the dust to settle!
  •  
    Joe Gelet
    Aug 03 05:18 PM
    My Website
    actually, the article was quite lengthy and i felt well written, and an editor at seeking alpha cut it to shreds. not knocking their editing but it was changed 95% from it's original form, so if you want to complain please email the editors of seeking alpha.
    regarding the yuan, china is not the next USA i know jim rogers and others are big yuan cheerleaders, and it may increase (i'm not advocating short yuan) it's just not a SURE bet, whereas swiss francs and some other plays are, as we see it. gold should comprise any % of a portfolio due to inflation hedge, and i do agree gold will be volatile, but NOT because ben can do anything about it! thanks for your comments, see other articles on eliteforexblog.com
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