Most Stable Currency in the World?

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portal202
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Most Stable Currency in the World?

Dear CM community,

Based on the work of CM, Peter Joseph, Dr. David Martin and many many others it appears that in the mid to long term the US dollar is going to fall.

I would like to pose a question to the community on what it believes the most stable currency in the world will be in the future and why.

My humble opinion is that any consumer/ Debt based society like the UK and Australia will also face a similiar fate as the US.
First World Countries with a relatively low debt to GDP ratio, mid leveled consumption and more sustainable economies would have a more stable currency in future shocks..

Switzerland is the best example that i can think of...and i'm thinking of exchanging my USD accounts for Swiss Franks.

What is your opinion on the most stable world currency of the future and why?

Thanks,

John B.

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Re: Most Stable Currency in the World?

Gold and Silver.  Self Explanatory.  

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Re: Most Stable Currency in the World?

Gold and Silver relative to the dollar have huge risk in a deflationary environment.  In the event of another economic collapse, there is a good chance the dollar will buy you way more than your gold will.  In other words, if history repeats, gold will deflate while the dollar strengthens relative to other asset classes.

The issue is that if hyperinflation ensues, the opposite is likely true.  The extremely hard call here is guessing what will happen next, and on which time frame.  The risk in all assets has never been higher, and the volatility in all asset classes over the last two years is far greater than any other time in modern history. 

One thing is for sure, anyone who makes a definitive call on where to hide your wealth, outside of trying to become more self sufficient, is purely guessing.  The arguments on all sides are incredibly persuasive and logical.

Good luck!

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Re: Most Stable Currency in the World?

Hi Portal202! Welcome.

Ricket wrote:

Gold and Silver relative to the dollar have huge risk in a deflationary environment.  In the event of another economic collapse, there is a good chance the dollar will buy you way more than your gold will.  In other words, if history repeats, gold will deflate while the dollar strengthens relative to other asset classes.

I have to disagree with you on PM's (precious metals) being a risk in a deflationary period. PM's do well during inflation and deflation because of fiat volitility. 

Why Deflation Is Good for Precious Metals - http://seekingalpha.com/article/183323-why-deflation-is-good-for-precious-metals

Actually in 1929 gold was used to deflate the dollar and most likely will be used that way again.

Portal202. IMHO fiat currencies are dead its only a matter of time. If you hold anything that is a paper promise, i.e. stocks, bonds, Federal Reserve Notes, etc, you will lose any wealth you have aquired. Buy physical gold and silver now, at any price. If you try and time the market you will lose.

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Re: Most Stable Currency in the World?

John B

CM has stated in the past that all fiat currencies are skydivers.  He indicated that he believed the Canadian dollar was one of the more stable currencies if their is such a thing in today's environment.  About a year ago I opened a bank account in Canada and have transferred a significant sum of money there.  Canada is fiscally more stable than the US and I suppose the Canadian dollar has some backing with their oil reserves.  I live about 2.5 hours from the Canadian border, which is another reason this currency would be helpful to me.

Brian

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Re: Most Stable Currency in the World?

Gold sometimes does better in inflation and sometimes in deflation vs the dollar and sometimes it doesnt..  Take a look at Oct 08, while the economy collapsed, the dollar flew and gold tanked.  That was deflation.  Same thing happened in the March wave in 09.

I'd say those are two very recent, powerful, and most correlated examples I can find.  Its important to look at situations that will correlate with our current times, govt, global economy etc.....therefore I think the deflationary waves of the past 18 months hold way more weight than occurances in 1929.

Currencies are in trouble, no doubt, but people are not totaly stupid.  When our hands are forced, the printing press will slow and we will buy more time.  As the supply of dollars diminish, they will chase goods that have use, and gold is of no use.

Again, I can see the merit in having some gold, as pyscholgy runs markets for long periods of time, but I think people are way too married to gold on this site.  The one certainty in investing or wealth protection is that nothing is certain.  If you are ever certain of an outcome, my advice is to be very very careful.  No investment's future is as certain as the average gold bug thinks!

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Re: Most Stable Currency in the World?

portal202 wrote:

I would like to pose a question to the community on what it believes the most stable currency in the world will be in the future and why.

Gold. Why? Because Bernake can't counterfeit it. To anyone worrying about deflation I would suggest they might want to look at www.usdebtclock.org and Zimbabwe. 

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Re: Most Stable Currency in the World?

I heard this funny line by Chris M at the UN event yesterday:

The dollar is the worst currency in the world, except for all the others.

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Hallelujah!

rickets wrote:

Again, I can see the merit in having some gold, as pyscholgy runs markets for long periods of time, but I think people are way too married to gold on this site.  The one certainty in investing or wealth protection is that nothing is certain.  If you are ever certain of an outcome, my advice is to be very very careful.  No investment's future is as certain as the average gold bug thinks!

+1,000,000,000,000,000,000,000,000,000,000,000 or the Total National Debt, whichever is bigger.  

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Re: Most Stable Currency in the World?

Care must be taken when comparing Zimbabwe or Wiemar to the current US.  The former is almost not worth mentioning, and the latter was right after the country lost a war.  While researching these examples is worth while, putting much weight in them when predicting the future of the most powerful, global country in history is a big big stretch.

How about the Roman Empire?  I put more weight behind that comparason.  And, if we use that, we have decades of slow decline ahead rather than this overnight shock.

Take a look at Japan and their debt.  Take a look at Europe.  The US is far better off than them.  Gold is being touted here as a way to keep relative wealth/buying power.  If currencies start failing, the US is still likely to retain the greatest relative wealth.  If people are forced to sell assets to stay alive, they will sell gold to raise dollars to use to live.

Try taking the other side of the argument...open your minds to both sides of the debate.

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Re: Most Stable Currency in the World?

Rickets wrote:

Currencies are in trouble, no doubt, but people are not totaly stupid.  When our hands are forced, the printing press will slow and we will buy more time.  As the supply of dollars diminish, they will chase goods that have use, and gold is of no use.

Really?! There is no way they will stop the printing presses because all of the old problems will resurface 100 fold. It wouldn't matter even if they did. The damage is done. There is no time to buy. "As the supply of dollars diminish, they will chase goods that have use, and gold is of no use. "This sounds like a Keynesian mantra. Where will all of this quantitive easing go? What goods? The ones that currently aren't selling? And who will have the money or desire to buy them?

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Re: Most Stable Currency in the World?

"Really?! There is no way they will stop the printing presses because all of the old problems will resurface 100 fold. It wouldn't matter even if they did. The damage is done. There is no time to buy."

Using absolute statements like "there is no way" is clear proof to me that the blinders are on.  There certainly are many many ways.  There are many many governments in history that have recovered after similar debt situations.  The political landscape is volatile right now, even a republican senator was elected in Mass.  What if Ron Paul or similar minds get more traction?  What if the idea of printing money rather than issuing debt (with tight controls) gets momentum?  The landscape would change overnight.

Thinking or speaking in certainties is the quickest way to separate yourself from your wealth.

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Re: Most Stable Currency in the World?

ugh.

I just don't have the energy to argue the point. Yes everything will work out. Things aren't has bad as they seem. Someone will come along and fix things.

*Man these blinders are itchy*

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Re: Most Stable Currency in the World?

Rickets,

I appreciate your posts. While I am expecting Gold to do well over time, and have invested along these lines, it is always good to look at your positions (especially the strongest held ones that tend to cloud reason and judgement) from the other side. This is an absolute statement I think you would agree with.

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Re: Most Stable Currency in the World?

I keep some of my holdings in foreign currencies such as Yen, Swiss Franc, Canadian Dollar.  But since 4 months ago my largest foreign holdings are now in the Norwegian Kroner.  Being as they've stayed independent of the EU and they've been very stable in their fiscal responsibilities.

http://www.nationsencyclopedia.com/economies/Europe/Norway-MONEY.html

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Re: Most Stable Currency in the World?

The purpose of currencies today is to keep their respective banking systems stable.  The stability of the currency itself is of secondary importance, so I would say none are or can be stable and choosing which one is the "least" unstable is a pretty difficult task. 

I wouldn't be so keen on Swiss francs.  The Swiss have one of the highest or highest debt-per-capita in the world.  We're far behind them on that scale.  The Canadians are going to be toast if the US goes down the tubes as predicted.  The Ozzies are in a property bubble perhaps worse than ours, and they're tied to China which is the mother of all bubbles.

At this moment, while I know the dollar will be toast eventually, it is my currency of choice.  As several people, including CM Have said, it's the least worst.

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Re: Most Stable Currency in the World?

rickets wrote:

Care must be taken when comparing Zimbabwe or Wiemar to the current US.  The former is almost not worth mentioning, and the latter was right after the country lost a war.  While researching these examples is worth while, putting much weight in them when predicting the future of the most powerful, global country in history is a big big stretch.

How about the Roman Empire?  I put more weight behind that comparason.  And, if we use that, we have decades of slow decline ahead rather than this overnight shock.

Take a look at Japan and their debt.  Take a look at Europe.  The US is far better off than them.  Gold is being touted here as a way to keep relative wealth/buying power.  If currencies start failing, the US is still likely to retain the greatest relative wealth.  If people are forced to sell assets to stay alive, they will sell gold to raise dollars to use to live.

Try taking the other side of the argument...open your minds to both sides of the debate.

-1

www.usdebtclock.org or John Williams I respect your view but I do not agree with it. We are insolvent. We either will default or destroy the currency/inflate out of it. Just because we are a 900# gorilla doesn't mean we can do anything.

I'd also bear in mind that gold is a currency. 

Best.

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Re: Most Stable Currency in the World?

Currency Bets for 2010

Tickers in this Article: DBV, GLD, FXB, FXE, FXY

Betting against the U.S. Dollar has been a one way ticket to profits for the better part of the last decade. And whether the recent reversal is one that will last or will be just an intermediate turn in an ongoing dollar bust remains to be seen.  

Either way, there are profits to be made in the currency market, no less than in equities, fixed income and commodities. Picking the currencies is, of course, the challenge - if investors have to pick at all. If the U.S. buck remains bullish, the best bet is to buy U.S. Dollar denominated assets. If not, here is a sampling of currencies that could outperform.

Of the big names in the currency game, the Japanese yen should be near the top of every investor's list of desirables going into 2010. Last year, the Yen offered only marginal gains against the U.S. Dollar, but Japan's position as an Asian trade hub, her proximity to an ever expanding Chinese economy and a new push to make the country less reliant on exports to drive growth should all play in the yen's favor. The CurrencyShares Japanese Yen Trust (NYSE:FXY) seeks to match the movement of the Japanese yen vis-à-vis the dollar, plus accrued interest. (For related reading, see The U.S. Dollar And The Yen: An Interesting Partnership.)

Japan and Europe are the Obvious Choices
The other obvious bet against a rise in the U.S. currency is the euro. In 2009, the euro managed a roughly 5% gain against the dollar, as measured by the CurrencyShares Euro Trust (NYSE:FXE).

Though closely related to the euro, the British pound still moves independently against the dollar and is less subject to the wider economic swings that obtain between countries on the European continent. The pound has stabilized over the last half year after worries about that nation's banking system eased. In 2009, the pound gained over 11% against the dollar and may be the strongest of three aforementioned plays going forward. Pound bulls should try the CurrencyShares British Pound Trust (NYSE:FXB).

Alternatives for the Addle-Headed
For those unclear on which direction currencies will run in 2010, there are two more options: gold and strategy. Gold is viewed by many as a currency and by an increasing number as the current currency of choice. Interested parties might consider the SPDR Gold Trust (NYSE:GLD).

For those wanting a more strategic approach to the question, consider the Powershares DB G10 Currency Harvest Fund (NYSE:DBV), a product that takes a long leveraged position on currencies from countries that have relatively high interest rates, and a short position on countries with relatively low interest rates. Leverage used is roughly 2:1, long to short. The fund had a steady performance last year, turning in 20% gains for investors.

The Bottom Line
Where the American Dollar goes in 2010 will determine the profitability of the entire currency spectrum this year. If you're a dollar bull, focusing on bread and butter investments is your best strategy. But if the dollar continues to fall, at least one of the above mentioned funds should turn in a bundle. (For more, see Taking Advantage Of A Weak U.S. Dollar.)

http://stocks.investopedia.com/stock-analysis/2010/Currency-Bets-For-2010-FXY-FXE-FXB-GLD-DBV0111.aspx?partner=YahooSA

Powershares DB G10 Currency Harvest Fund makes sense too me.

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Re: Most Stable Currency in the World?

rickets wrote:

If people are forced to sell assets to stay alive, they will sell gold to raise dollars to use to live.

Yeah, and in a few years they will get lot and lots more dollars for their gold.

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Re: Most Stable Currency in the World?

I very much appreciate everyone's comments. I posted this thread more in the light of currency for barter than investment. Although i understand gold is the standard and most likely the safest store of weath it's a bit hard to buy a beer or go out to dinner with gold coins. I'm interested in hearing the communities opinion about  a currency to use for disposable income that will remain "more stable than most" rather than an investment vehicle.

Also as far as Farmer Brown's coment below-

"I wouldn't be so keen on Swiss francs.  The Swiss have one of the highest or highest debt-per-capita in the world.  We're far behind them on that scale."

I'm not sure that it's true considering Switzerlands debt per capita is 1/3 of that of the United States (http://en.wikipedia.org/wiki/List_of_countries_by_external_debt).

I'm very interested in hearing more about the Norwegian Kroner- that's certainly a currency that doesn't get the mainstream press of the others.

Cheers!

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Re: Most Stable Currency in the World?

portal202 wrote:

I very much appreciate everyone's comments. I posted this thread more in the light of currency for barter than investment. Although i understand gold is the standard and most likely the safest store of weath it's a bit hard to buy a beer or go out to dinner with gold coins. I'm interested in hearing the communities opinion about  a currency to use for disposable income that will remain "more stable than most" rather than an investment vehicle.

Also as far as Farmer Brown's coment below-

"I wouldn't be so keen on Swiss francs.  The Swiss have one of the highest or highest debt-per-capita in the world.  We're far behind them on that scale."

I'm not sure that it's true considering Switzerlands debt per capita is 1/3 of that of the United States (http://en.wikipedia.org/wiki/List_of_countries_by_external_debt).

I'm very interested in hearing more about the Norwegian Kroner- that's certainly a currency that doesn't get the mainstream press of the others.

Cheers!

Gold IS a currency Cool, you can take it to the currency window at a bank and get dollars of any sort. 

zim-1.jpg

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PMs vs. paper, the 3As and the Gs

You can argue for the strength and stability of any currency you want but any paper currency can go to essentially zero.  That's the downside risk.  I personally don't think that the dollar is going to disappear in a puff of smoke in the short term but I certainly wouldn't bet on it in the long term either. 

I'd agree with Logan's Run about the strength of Norwegian kroner.  If you look at the way Norway has managed its economy and reserves, it has made some smart moves.  We could learn from them.  However, the liquidity of the Norwegian krone in the U.S.A. is still in question, especially if there is any breakdown in electronic exchange mechanisms.   And again, the downside of any paper fiat currency, or even a basket of currencies, is essentially zero.

While I wouldn't bet the entire ranch on gold or silver either, I have more faith in PMs than any other single currency.  What is the potential downside of PMs?  They're never going to go to zero or even close to zero.  Silver has even less downside potential being an industrial metal as well and in increasing short supply to boot.  You can loose money holding them but you will never lose all your money.  Thousands of years of history substantiate that position.  And as we all know, "This time it's different" are famous last words for financial well being.  I'll bet on history.

PMs are definitely the way to go in an inflationary environment and can provide some protection in a deflationary environment as well.  I don't think anyone here would be foolish enough to put all their assets into just PMs or just paper currency.  Whichever way you go, I'd certainly hold enough cash so I wouldn't have to sell PMs in the event of a liquidity crunch and I'd hold enough PMs so I wouldn't be wiped out in the event of hyperinflation .

That being said, if you don't have ample water and ample food and/or food production capability (including produtive land) and if you don't have arms, ammunition, and alliances with others to protect your assets (the 3As of protection for your Gs), IMO, you're foolish.  In an all out SHTF scenario, there's nothing more liquidity generating than a loaded gun, especially if it's pointed at you or a loved one, so it's wise to have protection and capability in that area.  Once those essentials are provided for, then I'd address the optimal PM/paper ratio.

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Re: Most Stable Currency in the World?

portal202 wrote:

I very much appreciate everyone's comments. I posted this thread more in the light of currency for barter than investment. Although i understand gold is the standard and most likely the safest store of weath it's a bit hard to buy a beer or go out to dinner with gold coins. I'm interested in hearing the communities opinion about  a currency to use for disposable income that will remain "more stable than most" rather than an investment vehicle.

Also as far as Farmer Brown's coment below-

"I wouldn't be so keen on Swiss francs.  The Swiss have one of the highest or highest debt-per-capita in the world.  We're far behind them on that scale."

I'm not sure that it's true considering Switzerlands debt per capita is 1/3 of that of the United States (http://en.wikipedia.org/wiki/List_of_countries_by_external_debt).

I'm very interested in hearing more about the Norwegian Kroner- that's certainly a currency that doesn't get the mainstream press of the others.

Cheers!

Hi Portal,

Here are my sources:

http://www.nationmaster.com/graph/eco_deb_ext_percap-economy-debt-extern...

http://www.cnbc.com/id/30308959

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Re: Most Stable Currency in the World?

If anyone wants to look at what deflation will do to Gold and Silver, take a look at the markets today.  GLD, SLV....vs the dollar - UUP

Re other currencies above, like Swiss or Norweigen - and the Dollar - its very important to note the debt to GDP - but also the debt of individuals and corporations within those countires, and the wealth they have to offset that.  Further, its important to note what parts of the debts are owed to themselves (such as social security in the US).

When you net out all these factors, the US has the strongest financial system in the world still.  The wealth of our businesses and individuals is huge, and much of the debt we owe is to ourselves and with the stroke of our pen can be reduced.

We are years...likely decades, of worst case scenario before I will be able to go to the farmers market and buy bread with my silver.

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Re: Most Stable Currency in the World?

When you net out all these factors, the US has the strongest financial system in the world still.  The wealth of our businesses and individuals is huge, and much of the debt we owe is to ourselves and with the stroke of our pen can be reduced.

Financial Rescue Nears GDP as Pledges Top $12.8 Trillion — Bloomberg

http://www.bottomviolation.com/financial-rescue-nears-gdp-as-pledges-top-12-8-trillion-bloomberg/

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Re: Most Stable Currency in the World?

Spain's market down almost 6%.....not looking good guys. Who's first...Spain, Greece, Italy or Portugal? Dollar is going to get stronger.

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Re: Most Stable Currency in the World?

My comments were not saying that the US, or any other country has good or sound finanicial policy.  Nor was I suggesting the current path is sustainable.  I was offering a different, imo more sophisticated and logical way of comparing different currencies which was the point of this thread.

Further, I fully expect a massive asset price plummet quite soon.  If this asset deflation unfolds in similar speed to the last wave, then I expect the US Dollar to fly, and all other assets including gold to get kicked to the curb.  Point being, if the moves repeat the last wave last year, people would be far better off holding dollars than these blogs suggest.

Longer term, we will see....but the strongest asset in the world still might be the dollar.  If anything, its a debate and uncertain and gold has huge risk too.  And, in the end, my points over and over again on this site are to play devils advocate as its clear most on this site thing gold is the second coming and has no risk....which is absurd.

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Re: Most Stable Currency in the World?

Looks like the Euro is first to go down.

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Re: Most Stable Currency in the World?

Rickets

I can appreciate the devils advocate angle but when you make statements like:

When you net out all these factors, the US has the strongest financial system in the world still.  The wealth of our businesses and individuals is huge, and much of the debt we owe is to ourselves and with the stroke of our pen can be reduced.

Then you sound naively optimistic if not uninformed. Your view points frequently seem like myopic snapshots that don't take into account the whole. What 'wealth' do our businesses (and individuals) have when the dollar collapses, unemployment soars and the deficit reaches levels never before seen in human history?

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Re: Most Stable Currency in the World?

Rickets your posts are most helpful for a more balanced view IMHO....Thanks.

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Re: Most Stable Currency in the World?

Johnny Oxygen:  Are you aware that the net assets - liabilities for all individuals is over 50 Trillion in the US?  This does not include the net value of all its businesses - which is also HUGE and also balanced by its giant international exposure.  Further, are you aware that Social Security could be dramatically altered if just the age when benefits was altered to 70 or 72?  If medicade benefits were reduced by a mere 10% and/or the cost of healthcare was reduced by 5% the impact would be huge.  Medicare and Social Security are debts we owe to ourselves and can be modified without international objection.  Now, I am fully aware that individual wealth should not back public debt, but, it does.  The focus of this conversation is the validity of currency going forward, and in a worst case scenario, personal and business wealth will be considered as options to use to keep the country solvent.

Given giant amounts of our debts are owned to ourselves and alterable - and will be altered soon; Given our net total wealth of all citizens; given the weaker positions of almost every other country.....perhaps my comments are not so uniformed.  Perhaps I do take into account the whole and dont look at snapshots.  I also analyze likely changes to our debt structures and how when/if the economy starts collapsing again what the policy response will be forced to do.  What I dont do is see a headline of 12 trillion in spending and only think spending is out of control.  I then look at the assets behind the 12 trillion, the payoffs and benefits vs the liabilities.  I dont panic in other words.

For real, this is such a funny day to be discusing this, because the market is firmly proving my point. Spain is getting crushed, the euro is collapsing, the dollar is flying, and gold is getting crushed.  I think the market has spoken in support of my claims of the last few weeks on this site, and give me some credibility rather than the "naively uniformed" comment you throw around.

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