How Can the Average Person Hedge Against a Fall in the Value of the US Dollar?
Thursday, April 23rd, 2009 at
8:52 pm
Same Song Different Verse asked:
I’m not interested in buying mutual funds, futures, commodities. Buying “gold” does not seem to be a very practical suggestion to me. Any other ideas?
I’m not interested in buying mutual funds, futures, commodities. Buying “gold” does not seem to be a very practical suggestion to me. Any other ideas?
Tagged with: Average Person • Futures Commodities • Suggestion
Filed under: Commodity Trading
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Real estate? The markets are down in a bunch of areas. If you have enough cash you could buy property.
In a word…LAND!!!
Gold is good. Also you should buy a house to live in. I had 4 houses my first house cost $29,000 sold it 2 yrs later for $46,000 I took the profit and bought a 2 family house for $69,000 Sold it 10 yrs later for $235,000. Bought no 3 for $188,000 sold it 12 yrs later for $425,000. Bought no 4 upstate NY for $155,000 after i paid of the mtg and all my bills I have this house free and clear and put $125,000 in the bank. Oh by the way when Bought my first house gold was $35 an ounce Now it is over $600 an ounce.
What companies do to hedge their exchange rate risk is to hedge in the Forward Market. Get a forward market quote. You will get quote for 3 months, 6 months and I believe 9 months. If it is in American system it will be progressing when dollar is appreciating and reducing if dollar is depreciating. American quote is like 1.34/1 for Euros. So if you feel dollar is moving down in any of the above periods sell dollars in the forward market for Euro. When dollar is depreciating then Euro will be appreciating and place your cash in Euros and return back when the depreciation stops or invest in Europena t bills or stocks and convert back when you feel it is safe with dollars.
Since you are not interested in other forms of investments like gold etc; what I said is your best bet.
Check out
It uses a hedging strategy with two or more currency pairs with the us dollar. I am currently using this system with great success.
Given your parameters, there seem to be only a couple of options. One thing I can think of would be to open accounts in different currencies. Interactive Brokers is one U.S. broker where you can maintain account balances in different currencies, and you can buy and sell currencies (thereby holding an account in a different currency). They’ll give you balances in each currency. If you fund an account, and buy another currency, then you’ve got an account funded in that currency. You can either invest it in money markets (IB has decent rates for large balances, poor rates for small ones), or buy other securities based on that currency. I’m not shilling for IB, there may well be better options out there. Warren Buffett had a large investment in foreign currency, he abandoned it with the idea of buying overseas companies instead. Buying foreign stocks seems to be another idea. Given your limitations…those are the only two options I can think of.