Saturday, February 11, 2006

 

What Is The Best Mix Of Metals And Currencies?

A reader suggested this as a weekend topic: "It would be interesting to get an idea of what the portfolios look like of some of the posters on here. You can get as detailed as you want, or just keep it simple."

To expand on that idea, what does a model portfolio of currencies and precious metals look like?

Comments:
Percentages of a total portfolio are probably the best way to view this.
 
I can't help but think that forex plays are inherently short-term. Although the USD is ultimately headed downward, how long before all others follow? As they say, when the US sneezes, the world catches a cold.
 
On another note...

An investment newsletter stated that GLD has gone from the 25th largest holder of gold to the 13th. Consider the implications of it's continued growth, and you really have to wonder if any dollar value isn't out of reach.

The whole cycle is self-reinforcing and strengthening -- the more GLD they take off the market, the "rarer" and more valuable the remaining available gold becomes, thereby raising the value of GLD and attracting even more investors!!!

What happens when GLD has emptied COMEX and is sucking the miners dry? My guess is that mining will have ramped up, but GLD's appetite will have grown exponentially, too.

Could be gold (and silver) may end up being the biggest international bubbles ever due to GLD and the upcoming silver ETF. Of course, at some point these developments can't help but attract official attention and action, but again... by then we'll all be rich because we started early and cashed out before the train's forceably derailed.
 
'tj&the bear said..I can't help but think that forex plays are inherently short-term. Although the USD is ultimately headed downward, how long before all others follow?'

For most, I think your right. I like to keep a good percentage of my pure cash in foriegn currencies. It's really easy, cheap and if you use Everbank, FDIC insured. It's nice to earn interest in that currency, as there is no transaction fee. This blog is an affiliate of EB, and you'll find a link in the sidebar.

As for the short-term currency plays, those guys use a lot of leverage. I prefer to go buck for buck.

While some paper currencies will follow the greenback down if it goes, many nations don't have the trade and financing deficits that the US wallows in. Now some writers like China's currency along those lines. But I can't make the leap to hold communist paper. The Japanese are fairly sound, but are stuck in the deflation/negative interest rate spiral.

If you're interested, we could have a topic on the countries that are finacially safe and pay sane returns on savings. Who they are may surprise you. Good luck!
 
If you're interested, we could have a topic on the countries that are finacially safe and pay sane returns on savings. Who they are may surprise you. Good luck!
# posted by Ben Jones : 12:18 PM

Ben, I have yet to get into currency trading. I have not done much homework. I do think the Canadian dollar(loonie) looks good. What are your and others thoughts is this regard?
 
I found this interesting.

http://www.usagold.com/HathawayPyramid.html
 
4.8% Gold ETFs
2.2% Silver mining stock
5.2% Physical silver/gold/palladium
32.6% Various foreign currencies (these keep changing around)

Canada is determined to be valued 1:1 with USD (i.e. stronger loonie). The only thing they lack is a timeline for this.

I like Canada too much ... I have too much interest in their energy, maple leaf coins, and currency. :) Maybe if I can find something else as appealing, I can diversify more.
 
Some of the Nordic countries have attractive currencies. They produce some oil and don't run trade deficits.

I like Canada the country, but not the currency so much. Everything is expensive there, which could mean inflation.

South Africa is a mess and gold production is falling. It would be nice if there was a country that backed their money with gold and let the market set rates (are you listening Swiss?) but I can't really think of one right now.

Australia is a good candidate; produces commodities and can benefit from China's trade. I understand their dollar is highly priced. Maybe if it comes off a bit.
 
Off Topic, sorry, but something to ponder.Dr. Ron Paul would agree.

http://www.wrisley.com/comment.htm
 
45% Cash USD
20% U.S. equities via 4 stocks
17% Foreign equities mutual fund
11% Oil/Natural gas stocks
4% Euro currency ETF
3% Gold ETF

By the start of summer I plan on:

70% cash
10% Gold
10% oil/ Nat. gas
5% silver
5% Euro currency

There's a storm brewing...
 
If you're interested, we could have a topic on the countries that are finacially safe and pay sane returns on savings. Who they are may surprise you. Good luck!
# posted by Ben Jones : 12:18 PM
I'd love this as a separate topic. Which Nordic countries in particular do you like? I like the return on that Icelandic Krona. What about New Zealand? I would also like to explore the different ways to trade in currencies.
 
Do it, Ben.

Denning had lots of nice things to say about Australia in "Bull Hunter". Despite Japan's turnaround, they have a huge public debt level, so they still worry me. I'm definitely interested in other countries you may have a line on.
 
Hmmmm... no comment on my (admittedly OT) "(GLD) tail wagging the (gold) dog" theory?
 
CL:
I currently have a New Zealand currency in two CDs. Once they mature this month, I'm pulling out based on advice from Daily Pfennig. S&P is downgrading the country based on its debt, so their currency is set to slide.

It does have an attractive interest rate, and it's a beautiful country that I'd like to visit. Though based on data, I will no longer trade their currency for 2006.

South African Rands have been the best performer for me, but that was complete market manipulation. Since the currency is shady and volatile, I will also pull out of that. They have so much potential especially with all that gold.
 
tj&the bear said..
On another note...An investment newsletter stated that GLD has gone from the 25th largest holder of gold to the 13th. Consider the implications of it's continued growth, and you really have to wonder if any dollar value isn't out of reach.
The whole cycle is self-reinforcing and strengthening -- the more GLD they take off the market, the "rarer" and more valuable the remaining available gold becomes, thereby raising the value of GLD and attracting even more investors!!!

OMG. Wow. Possibly, fantastic. More? Got any good links? And a Central Bank is not going to be dumping gold anytime soon * if ever * to change the direction of the price.

FDIC may be meaningless if there is big trouble, per some of the housingbubbleblog ppl and their numbers. So be prepared to loose any investment in a bank. Also, for example ~ look at Argentina, a limited lockdown of the money supply after their currency devaluation that lasted how long? Quick changing, long lasting regulations.

When they say the Japaneese saved so much over the years, what instruments did they save it in?

Is the value of nickel a straight line over time?

Wouldnt choose Mollybellium - I think thats it - some articles were posted on here a week or so back. It is used for catylist converters in cars. I couldnt find the link, but I was reading a website by a long time hot rodding guy Yank or something, he has had automotive products out for decades. He is tooling up(?) for production of a new sparkplug that is supposed to eliminate all or most of the gasses that make catylist converters necessary. If it is successful - less the need for moly.

Copper seems like a long term looser too.


Gold - 1%
Silver - 1%
Lead - 1%
Steel - 1%
US fiat - 96%
 
Gold - 1%
Silver - 1%
Lead - 1%
Steel - 1%
US fiat - 96%
# posted by RowYerBoat : 1:29 PM

If I were you I'd drop the 4% you have invested in such a waste like metals. Go 100% U.S. fiat that's were all the smart money is, and you certainly sound like smart money! Perhaps even a genius!
 
wmbz,

help me out. Why so heavy in USD? I'm heavily in gold precisely because I feel extremely exposed in USD with inflation looming. How much faith do you have in Bernanke?

I'm surprised so many here are pro USD. 'Certainly an easy strategy to follow, but I'm not convicend. Rationale?

TIA
Soho
 
wmbz's just being a tad sarcastic.

I don't know that anyone here is exactly pro-USD, otherwise they wouldn't be here.
 
I'm surprised so many here are pro USD. 'Certainly an easy strategy to follow, but I'm not convicend. Rationale?

TIA
Soho
# posted by sohonyc : 4:54 PM

Sorry, I couldn't help but respond to the flippant post by "rowyerboat". I am not heavy on the US dollar. I wish I could be, however,going forward I just don't see dollar strenght.Having said that , currency's are not my strong suit. The Canadian dollar has some appeal to me, but Ben and others on this blog know much more about the world's paper money than I do.
 
EURO?

I have a question about the Euro dollar. Is it not the first currency to be created that was pure fiat to start with? I can think of no other currency that did not begin without a tie to gold or silver.Just a thought,does anyone on this blog see any lasting strength in the Euro?
 
Lasting strength? Depends on your definition of lasting...

The Iranian Oil Bourse (if it comes to pass) should boost the Euro and hammer the dollar against most other currencies. Otherwise, I just don't see the EU being a long-term powerhouse.
 
Perhaps I am a bit crazy among the pack. Here is what my portfolio looks like today:

35% gold
3% silver
32% Euro, AUD, CAD and Nordic bonds
2% Euro stock
5% Japan stock
10% energy
13% USD fiat cash, Short Real estate fund

What I am trying to do now is to get to 5% USD exposure, the rest all pouring into precious metals
 
Flippant? Hmmm... objective, yes, indifferent, maybe, too light, perhaps. Disrespectful? No disrespect towards any individual was intended. *I* thought *I* was polite enough.
.
I do not wish to be heavy on the US Dollar, it is just where I am at. As it has been said before by, I believe, W. Buffet, right now there are no "good buys". Any PM I bought before Winter '05 then I might be ok long-term because at $200 gold, I am still better off than if I had bought at $570, as long as a technological advacement does not do to PMs what happened to aluminum (it used to cost more than gold). My PM investments should avoid becomming a liability even with a short term loss, unlike real estate eh? Speculators using leverage and anyone having bought any PM lately might be sweating a bit right now. It has been soooo tempting to unload all the rest of my PM the last few weeks $. I keep hearing sucking sounds at the exits of the PMs market. Sucking sounds just like the sounds comming from the exits of the real estate market. But thats a good thing - clearing out the deadwood and all that. The similarities of the real estate and the PM markets are amazing.

Besides, 'splain something to me (and the one next to me) so I can understand it, and you may just learn something ya didnt know before. What do they call that... triangularization?

BTW - I was serious too, that comment by TJ has been bouncing around my thoughts since. I think it may even have long lasting, far reaching, worldwide, cultural changing aspects to it as well. As much as the housing bubble did, maybe more so if there is anything to, "peak oil". Add to that, if Iran doesnt do the oil bourse or is, "prevented"- why wouldnt another country try, such as Russia? The Russian/Iranian oil - for gold ETF certifcates - bourse. Is it inevitable, somewhere?

The back business section of my local newspaper was filled with articles about saving, for people who have never saved before or knew anyone who has. I have never seen such volume of the subject in the newspaper. Often, for them, for anyone, find a sucessful person and learn what they do and why, then just do it. Who is a successful saver in North America? The Japaneese apparently are great savers. What was the secret of their success, their central bank? Did they save yen, gold, silver, CD's, GPZ 1100's,... what?

Is the best mix of metals longterm:
83% gold
10% silver
4% nickel
1% lead
1% steel
1% US fiat


"In God We Trust, All Others Bring Data." - and objective observations.

Thinking out-loud and circling above the carnage.
Just My Humble Opinion
 
Looking into a fund called the Merk Currency Fund. Their breakdown is as follows:

Euro 44.8%
Swiss Franc 7.0%
British Pound 7.2%
Swedish Krona 1.0%
Australian Dollar 15.3%
New Zealand Dollar 3.1%
Canadian Dollar 10.0%
US Dollar, net * 0.0%
Gold Gold * 11.6%

Just starting to do research into this. Expense ratios are 1.3%, so not too different from Everbank which charges .75% to convert each way. This guy Merk sounds fairly sensible.

Anyone else holding Central Fund of Canada (CEF). Right now the easiest way to own silver (55% gold/45% silver in the fund). Getting out of dollars as best as I can with some etfs: FXI, VWO, EWJ, EWC, EWM gets me in China, Emerging Markets, Japan, Canada, Malaysia. Been buying GLD since about 44 and think we're just going through a little shake-out. Funny how it always takes a dive when gold trading hits NY. Could it be that the U.S. Government wants to keep it down. After all, wouldn't want China to sell too many of it's George Washingtons...
 
I own Merk Hard Currency fund as well.
 
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?