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Who cares about the dollar?


Guest Broxburnboy

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Guest Broxburnboy

With the current record high price in gold and the erosion of the USD against a basket of other currencies being now an

ongoing trend, perhaps its time for a discussion on the effects of volatility of currencies to the value investor.

Are "macro" trends now negating the accuracy of "bottom up" analysis?

 

Here's a good summary of the currency issue:

 

 

http://www.321gold.com/editorials/merk/merk110509.html

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I think where you live (home currency) definitely has to be a factor in ones decision making process. I live in Canada and am of the opinion that the CAN$ should do well on a relative basis. As such I am not unhappy to hold CAN$ (currently 85%) and wait for opportunities. If I was a US investor I am not so sure I would be as happy holding a large % of my portfolio in US$ and waiting for opportunities as it appears to me that the unofficial US government policy is to devalue the currency.

 

The 15% I have recently purchased BRK-B, KFT, JNJ & WMT. If the CAN$ continues to strengthen (i.e. to parity with the US$ or better) I will continue to look to the US for well managed, large companies selling a reasonable valuations...

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The world mines about 3000 tons of gold a year and uses up about 300 tons while the rest is hoarded.  At this rate the world has more than 300 years worth of gold in storage and that number grows by 9 years every year...Gold makes the housing bubble look like the internet bubble..its a zero coupon bond with no par value.  Speculative bubbles last longer than anyone expects...but theres no reason it wont sell for less than the cost of production sometime in the future. 

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