best currencies to invest in
If you have any illusions, put them aside now. It's the Yuan's world - the West is just living in it, or borrowing from it as the case may be.
Demand for the Yuan is growing at such a staggering rate that your financial future will be built upon it.
Admittedly, this is a very tough concept for most people to wrap their minds around. It's tough to lose "your" spot at the top and it's even tougher to know you're losing it and not be able to do anything about it because the leaders who are responsible for maintaining that position don't understand the end game.
It's made worse by Washington's insistence that the dollar is still a weapon when large swathes of the world now believe it's a liability. It's exacerbated by Europeans who forget that a sound currency actually requires underlying economic stability. It's threatened by the latest crop of Japanese bankers who seem determined to print money into oblivion.
Sadly, this is not new. The old guard always fights for the status quo when something different or not well understood like the Yuan comes onto the scene.
Is Japan About to Fire the First Shots in a 1930s Style Currency War?
Chances are you've heard about the so-called "race to the bottom" in which various industrialized nations are gradually allowing their currencies to depreciate in an attempt to maintain competitive parity.
Forget about it...the real risk right now is an all-out 1930s-style currency war. I know it's not front-page news yet, but I have a sneaking suspicion it will be shortly.
It's going to blindside Washington and most of Europe, where central bankers, politicians, and more than a few economists fail to recognize that events from nearly 100 years ago are now primed to repeat themselves.
Worse, it will devastate an entire class of investors who have put their faith in the current economic dogma of endless bailouts and money printing.
Ironically, this currency war won't start because of international problems. Instead, it will be touched off in earnest because of domestic concerns-- only they aren't ours. My guess is Japan fires the first shots.
- Japan's newly elected Prime Minister, Shinzo Abe, is calling for unlimited stimulus and more aggressive financial intervention in an effort to boost Japan's flagging economic situation and eviscerated domestic economy.
- The Bank of Japan has doubled its inflation target to 2% while also promising to buy unlimited assets using a page from Bernanke's playbook. Bear in mind that Japan's combined private, corporate and public debt is already nearly 500% of GDP, which is much larger than the 250% that's commonly bandied about in the media.
- Japan has one of the strongest fiat currencies on the planet, which means it has the most to gain and everything to lose if somebody beats them to the punch. An expensive yen holds back Japan's exports by making them more expensive in global markets, while the debt I just mentioned hobbles future economic development by robbing the private sector of capital it needs for an actual recovery.
The Best Currencies to Invest in for 2013
The best currencies to invest in for 2013 come from Asia, South America, Australia - but not the United States.
The Federal Reserve's misguided insistence on a loose monetary policy, ongoing resistance to government spending cuts, and another increase in the U.S. debt ceiling will all conspire to boost inflationary pressures and restrain the value of the U.S. dollar.
That will, of course, impact domestic market performance and cut into real returns on dollar-denominated investments - but it will also provide major opportunities for U.S. investors who can target issues denominated in the strongest foreign currencies.
Unfortunately, that doesn't include most of the world's other major currencies - including the euro, British pound and Japanese yen - since the economies of the underlying nations are also suffering from sluggish economic recoveries and problems with excess debt.
As such, the strongest currencies in 2013 will likely be found to the north and west of the United States, starting with the neighboring Canadian dollar.
Four of the Best Currencies to Invest in for 2012
If you had to pick one word to describe the outlook for the world's major currencies heading into 2013, it would have to be "inconclusive."
Since late May, none of the leading currencies has managed to establish a prolonged trend, with choppy action being driven by continued economic instability in Europe, a sluggish recovery in the United States and slowing growth in the Far East.
Even the Japanese yen, which has been one of the strongest currencies the past few years and held fairly steady through most of the summer choppiness, has weakened in recent days in the wake of a slowing Japanese economy and falling export business, much of the latter blamed on the strong yen.
And the indications are the world's major currencies will likely stay that range bound for the remainder of 2012. Investors can expect price movements to be driven by short-term speculative reactions to each new economic report, unexpected developments in the U.S. election campaign and the continuing failure of European bailout proposals.
So, what's a currency-conscious investor to do?...
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