Investing in the $$$$$.

WH BONNEY

Hi All,

I have about 20k to invest for the short/medium term. I am considering converting into US$ and would appreciate any opinions on the merits or otherwise of this.

Cyrus

why not use igindex or the like to bet on the currency so u dont need to tie it all up?

WH BONNEY

Cyrus wrote: »

why not use igindex or the like to bet on the currency so u dont need to tie it all up?

I will need to go and educate myself on igindex.

daveirl

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WH BONNEY

Dave,
I'm no ecconomist and dont have reams of facts & figures to back up my reasoning. What I do know is that the dollar this week hit an all time low against the euro and has fallen by 25% against the euro in the last 24 months.

So has it bottomed out ? Is it capable of returning to previous levels ? Will the presidential election have a positive impact on its performance ? etc etc

I dont know, but if you were to take a positive view there may be a good return to be made.

Of course maybe im off my head & well off the mark on this one.

daveirl

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mcirl2

In relation to the dollar - I was looking at a monthly bar chart yesterday and noticed an exhaustion gap about a week ago (for the week). The only gap before that was a gap in the middle of the trend (measuring gap) and the only gap before that was the breakaway gap back around 2003 I think.

Maybe it is my very elementary knowledge of Technical Analysis but it seems to be a textbook gap case.

Therefore I would expect that the euro should peak at about $1.55-$1.60 before the dollar starts to rebound.

What do people think?

WH BONNEY

daveirl wrote: »

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Jaysus Dave stop picking holes in my posts. I asked for opinions on the dollar not on the quality of my posts.

kmick

Well OPEC are seriously considering moving to euro pricing for oil. If that were to happen I could see the euro at 2 dollars. I would not put 100 euro in dollars right now.

portomar

kmick wrote: »

Well OPEC are seriously considering moving to euro pricing for oil. If that were to happen I could see the euro at 2 dollars. I would not put 100 euro in dollars right now.

me neither.

technical analysis is a useful tool, but not when things change seriously. many countries, including china, the UAE and some other arab states are thinking about diversifying away from the dollar. if china gets rid of its us debt then the dollar is in serious trouble.

http://www.arandomwalk.com/2007/11/07/too-much-going-on/

any move by opec would be cataclysmic. i heard a currency trader say yesterday on cnbc that everyone he knows is getting away from dollars and dollar denominated assets. the russell 1000, which measures small cap us companies is getting hammered a lot worse than s&p 500 because stock brokers fear the dollar will continue to slide and want to get into companys with an international rather than domestic focus. theres a school of thought that the us government and fed wants a weak dollar, to close the trade gap primarily. my friend works in currency trading and his opinion is the "dollar is king", and the "greenback always comes back" but this is based on the fact that most assets, oil in particular are dollar denominated, gives us inflation a free pass, but with that in question, all bets are off in the medium term. i wouldnt put any cash in dollars right now.

daveirl

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Time Magazine

Would completely agree with davirl that it's farrr too risky to be putting 20k on a single thing like that. Though it could be a reasonable enough gamble, if you're that way inclined. You might consider looking into currency options.

And incidentally, the ISEQ is down 40% this year - that's a big dip, too. It's also more likely to rise substantially than the currencies.

WH BONNEY

Thanks for the responses guys. I think I have been politely persuaded that my original idea might not be as fruitfull as I had anticipated.

daveirl

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portomar

"I don't think it would a jot of difference - http://web.mit.edu/krugman/www/seignor.html - it's mostly Iraq conspiracy theorists who seem to believe that the value would change if it was no longer traded in dollars."

The article states:

"So the U.S. does in effect get a zero-interest loan out of the dollar's international role--but it probably amounts to only a few billion dollars, small change for an $8 trillion economy. "

doesn't seem like he knows or has investigated exactly how many billions is in question, doesn't fill me with confidence. Noone can convnce me that every account dealing with oil switching from dollar to yen, yuan or euro wouldn't deflate the currency, whatever about the consequences for the us economy, which, in truth, the above article is more concerned with.

daveirl

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moe_sizlak

kmick wrote: »

Well OPEC are seriously considering moving to euro pricing for oil. If that were to happen I could see the euro at 2 dollars. I would not put 100 euro in dollars right now.

iran has been talking about trading there oil in dollars recently which is one of the key reasons the usa is considering attacking them , not many know this but sadam was making serious moves to trade oil in euros back in 2002

daveirl

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portomar

moe_sizlak wrote: »

iran has been talking about trading there oil in dollars recently which is one of the key reasons the usa is considering attacking them , not many know this but sadam was making serious moves to trade oil in euros back in 2002

saddam DID trade oil in Euro. The UN oil for food programme was moved from dollar to euro, when €1 was worth $.80, therby slicing 20% off iraqs oil revenue in one fell swoop. euro increased to 1.20 in the years after, meaning a gain for iraq.

its supply and demand, lets say every brokerage in amsterdam that trades oil and gas suddenly has to trade its Dollar for Euro, you would get them having to empty thier reserves of dollars and buy Euro. think about the amount of money spent on oil and gas trades every day. its billions. The us has been given a blank cheque on the inflation of its currency, it keeps printing money and it keeps being purchased by people around the world who need to buy oil and gas (or soy, wheat, coffee etc.) if that cash suddenly got dumped, and remember, all currency transactions are binary, the dollar would plummett against most currencies.

Time Magazine

Lads, there's nothing wrong with discussions about how diplomatic disputes might affect currencies, but statements like "iran has been talking about trading there oil in dollars recently which is one of the key reasons the usa is considering attacking them" is dribble that isn't suitable for this board. It's a forum for discussing investments and markets, not conspiracy theories. Anyway, if the dollar loses value, that's bad for importing goods but great for exporting them, so it tends to be cyclical.

daveirl

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portomar

maybe your right, still not sure im convinced. can we agree (as guy on above article states) that any move away from dollar pricing would harm sentiment on the dollar medium term among currency traders?and central banks who decide what cash reserves to keep??

daveirl

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stevedublin

daveirl wrote: »

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Isnt that the whole point why the currency commodities like oil are priced in is important? If oil is priced only in dollars, governments around the world will try to have much of their reserves in dollars, if it is priced in euros and dollars and yen and whatever else, there is no need to have dollars in reserve because other currencies work just as well as dollars, there is no longer anything special about holding dollars.

portomar

stevedublin wrote: »

Isnt that the whole point why the currency commodities like oil are priced in is important? If oil is priced only in dollars, governments around the world will try to have much of their reserves in dollars, if it is priced in euros and dollars and yen and whatever else, there is no need to have dollars in reserve because other currencies work just as well as dollars, there is no longer anything special about holding dollars.

central banks hold dollar, or any other currency for that matter, to stabilise their own currency, not to buy oil. the reason dollar is often favoured is because its a world currency, a large one and traditionally a stable one. central banks don't use their reserves to buy commodities. the important thing is a currencys reliability against others. no one is going to back their currency up with the icelandic krone because its too small and unreliable.

WH BONNEY

Just taught I'd let you guys know, after taking the good advice offered regarding the possible perils of investing in the $$ and other alternatives available, I have instead invested in AIB @ 13.929.

Time Magazine

WH BONNEY wrote: »

Just taught I'd let you guys know, after taking the good advice offered regarding the possible perils of investing in the $$ and other alternatives available, I have instead invested in AIB @ 13.929.

I'd say that's a better bet.

Just so you know though, you shouldn't take anything said on this board as financial advice.

Minder

Continuing the discussion of the direction of the dollar, a look at a long term dollar index chart shows that the recent failure of support at 79.05 suggests that the trend remains down. That particular support had stood since 31 Aug 1992. So it is significant that it has failed. Technical bounce from an oversold position at 74.00 before continuing down. Target 68.00.

Fed interest rate review on 11th Dec will tell the tale.

macmad

I would stay away from the $. hey, you will spend the profits in euros then keep it in euros. Lots of good euro based investments out there so why not just leave the currency risk out of it. There is to much uncertainty about the $ at present.....twin deficits, posiible incraesed interest rate differentials etc etc; there is plenty of downside to this but I dont think the upside is spectacular.

if you want to take on some $ exposure look at some companies that earn plenty of revenue in US so you get some upside/some downside. CRH might be a good bet. they will gain from $ strenght but wont collapse if $ falls as they have plenty of ex US earnings also. it has been battered lately but looks like earnings will remain strong

Anyway, who knows!

mox54

The dollar would be a bad bet for now, it's going to have to come down against the euro and do it pretty fast because China is making a laughing stock of the US right now, i can't see it going much higher and should stay as is or fall a bit more but certainly can't see euro to $1.50.

pickarooney

WH BONNEY wrote: »

Just taught I'd let you guys know, after taking the good advice offered regarding the possible perils of investing in the $$ and other alternatives available, I have instead invested in AIB @ 13.929.

Can you give more details on exactly what you invested in to get that return?

WH BONNEY

Hi Pickarooney,
The above figure (13.929) is the price at which I bought AIB shares and not a rate of return.

Time Magazine

Your rate of return (at the moment) is about 10%. Not too shabby for six weeks eh?

WH BONNEY

Ibid wrote: »

Your rate of return (at the moment) is about 10%. Not too shabby for six weeks eh?

A bit of a blood bath today but we are still heading in the right direction.

Clytus

Buying dollars!!!!!!!?????.....are you mad????

Merrill Lynch and Goldman Sachs have both declared that the US is in recession.....and Jim Rogers was on Bloomberg this morning giving advice to run like hell from the Dollar. He's buying The Chinese Yuan, Swiss Franc and Jap Yen.

According to Rogers,the US economy is in a far worse condition than the Fed will admit and that Greenspans and Bernankes approach of pumping out money has only added an inflation issue to the mix aswell.He also added that this recession is going to bite down hard on some sectors...

Ekancone

No way. Im convinced that the US as purposely devaluing the dollar in order to allieviate their balance of payments deficit. The Fed are rumoured to be dropping the rate again next time round. All the while the ECB are itching to raise rates. If its currency you want to invest in, hang on to your Euros!

portomar

glad you stayed away from the dollar at this point id say?