Beginning of a bear market for the dollar

[powayseller]

Ok, I am asking myself, what was I thinking buying CD? The dollar is starting a bear market. It is at $1.27 per euro, and one currency trader predicts it will be at $1.33 per euro next year. It fell 14% last year, and gained 7% this year as the Fed raised interest rates. The concern is that once the Fed stops raising interest rates, the dollar will continue falling.

That will make imports more expensive, raise inflation, and reduce the value of the dollars in our CDs.

What are other people here doing about this? Any concerns about holding dollars?

From Bloomberg

“The odds are it’s the start of a bear market for the dollar,” said John Taylor, chairman of FX Concepts Inc., a New York firm that manages $12 billion in currencies. He predicts the dollar will return next year to its record low of $1.3666 per euro set in December 2004.

[powayseller]

I can buy Treasury bills at auction through my 401(k), but not foreign currencies; Vanguard limitation. I may switch to a full service brokerage so I can buy foreign currencies. Does anyone have a recommendation?

[LA_Renter]

EVERBANK

Here is the link; http://www.everbank.com/main.asp?affid=eb

You can invest in a wide variety of world currency accounts.

[VCJIM]

I put some of my money in a Pacific Rim index fund (Vanguard). While this has the normal stock market risks / rewards, it also diversifies into (mostly) Yen. Let’s say that 1 year from now the price of this fund is exactly the same as when I bought it, but the yen has gained 10%. Assuming no fees, I gained 10% on the investment. That is my understanding anyhow!

[bob007]

dollar needs to fall against all currencies not just yen and euro

[powayseller]

VCJIM, I sold my Vanguard index funds. When the US recession starts, the Asian recession will follow. I expect the Pacific and emerging markets index funds to be down 30% next year. If so, what good is a 10% rise in the yen?

bob007 – I would invest in euros, canadian dollars, and swiss francs. So it doesn’t matter to me if the dollar strengthens against any other currencies.

[VCJIM]

I’m not advocating an Asian fund specifically, only that this method is one way to divest of the US dollar.

[bob007]

powayseller:
how do i own euro and canadian dollars ?

currently i own an unhedged foreign bond fund – PIMCO and Credit Suise mutual fund families.

[powayseller]

Submitted by LA_Renter on July 31, 2006 – 8:06am.

EVERBANK

Here is the link; http://www.everbank.com/main.asp?affid=eb

You can invest in a wide variety of world currency accounts.

VCJIM – I don’t want to buy a mutual fund as a roundabout way of diversifying out of dollars, because I do not want to own any stocks right now, besides the COP and BRK.B I already own. I believe mutual funds will lose value. Perhaps there is a dollar-shorting fund? I think Rydex might have it. But shorting is too risky for me. The Everbank account is the way to go for me. I will research it more.

[VCJIM]

PS, I don’t disagree, just wanted to mention it as a possibility for now or the future.

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