A fairly new reader asked for my opinion about gold (or other metals) and the euro (or other currencies) as traded via FXE.
I have been writing about gold since the start for its historically low correlation to the US stock market and that it tends to go up in the face of war and terror. Regardless of the fundamentals, when there is a terror event gold goes up. From that standpoint it will always have a place in the portfolios I manage. The weight and how it is accessed, GLD (client holding) or a mining stock or both may change based on my perception of the fundamentals.
I have not thought about adding silver. The supply and demand dynamics are different than gold and I have not been able to reconcile both sides of the argument yet.
I have written about the currency ETFs since long before they were issued. My theory from the start with these has been that they allow easy foreign diversification of cash just like an investor would do with stocks and bonds.
For now I have more interest in some of the other currencies as opposed to the euro. While I generally expect the euro will rise against the dollar, the economic fundies for Germany and France seem so week that I would rather go with the strength that other countries offer.
On a different note Seeking Alpha seems to have expanded its reach yet again. On MyYahoo I have a news feed for ETFs. One of the headlines this morning was an article I wrote over the weekend that Seeking Alpha ran yesterday. I don't know if this is new for them or not but I haven't seen this before. Personally speaking I derive a lot of fulfillment from the idea that the content I produce might help some folks be better and more knowledgeable investors.
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6 comments:
Hi What currencies do you favor.
generally speaking (keep in mind the intent is to diversifiy dollar holdings not speculate on forex) commodity based currrency and current account surplus countries and the Swissi as safehaven.
specifically just about every client owns the Swedish krona ETF (FXS) and a couple own the Aussie ETF (FXA) which I view as more agressive.
Let me start off by saying that I don't quite "get" currency trading. At least from the perspective of a buy-and-hold type of investor.
Isn't the value of one currency vs. another going to be range-bound, going up and down over time? Can a currency grow faster than another over the long-haul like a stock might?
So unless you're a fairly active trader trying to catch fluctations in the currency market, is there really any reason to buy in to a currency ETF?
Any thoughts on the two Rydex Currency funds (Dynamic weakening and strengthing dollar). For clients over the past year I have been taking a small position in the weakening dollar fund. It's leveraged 2x the currency basket. Thoughts?
Roger is clueless. Buying the krona is financial masterbation meant to confuse his client. Doesn't add any value with US 3 month treasuries over 5%. I see this with psuedo money managers all the time - create busywork and confuse the client to justify fees.
I strongly disagree with Roger on owning currencies, but I have 100% faith in his character and intentions. There is a big difference between disagreeing and discussing portfolio investment and unfounded slanderous attacks on some ones character.
Investors can not expect an advisor to be correct 100% of the time.
Investors would be much better off if all advisors were as concientious, forth right, and knowledgeable as Roger.
And I still disagree with him on currency investing.
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