Posted by Davy Bui on February 8th, 2010 in Market Commentary, Worth Reading (links to articles, etc.)
Email Davy

That’s what this Bloomberg article suggests:

Weak Dollar Illusory as Correlated Trade Shows Gains

It is always beneficial to confront our own beliefs and analyses. For those of us fearing for the long-term future of the US economy, this article puts a different light on the widely disseminated fact that the dollar has lost most of its value since leaving the gold standard.

Of course, gold is an attractive investment because it is the only credible fixed store of value — this article, even if taken at face value (a very dangerous act), suggests a competitive devaluation is taking place across the globe. At best, the US dollar is not good but rather less bad than other currencies. The case for hard commodities still stands.

In any event, investors will want to hedge their bets no matter which situation plays out: the stable US currency or a dollar collapse. The danger with focusing too much on the  big picture is the difficulty in nailing the timing and finding the opportunities to realize the investment thesis. As such, we continue to pursue a balanced approach to investing, letting the clear macro-economic trends inform part of our decision-process as we look for fundamental value.

For more info, look into our premium research service: EA-Premium.