Currencies
October 2004

in virtually every world currency. All these are “Xmas presents” I promised U. ☺ Hslm’s have long since moved out of the US$ or at least hedged via positions in “best” currencies, headed by the NZ$, A$, C$, £, in that order. They are best as they pay the highest interest rates, while being commodity backed, in 1st world nations, with good economies. If U don’t have at least half your liquid assets in those 4 currencies U haven’t listened to your Uncle Harry.

be the end of the US$ as a major reserve currency. Times have changed since the 80’s; massive US debt today & projected well into the distance (+ military burdens) make a ifference. U can be sure the flip-side of this $ downtrend is much higher levels for other currencies & gold beyond 500. (see our Futures section, pg 11, for fine tuning currencies shorterm). •••But, back to the present: US Fed interest hikes help US$, but 1.75 still unattractively low. The euro broke upside from a 3-mo symmetrical triangle. Looks higher. SFr broke up thru a 3-mo downtrend line, looks bit higher; interest rate unattractive.

£ broke up from 3-mo downtrend, looks higher, good int/rate. Yen: uninteresting vs US$. C$: at new high, better than euro. Rumor: will hike int/rates 2x before year end. A$ vs US $: broke over 72, probably test Apr 74.50 high, fat yield. NZ$: move back toward highs; best yield. Nor.Kroner: not recom; dull chart & low yield now. Gold now seen as a zerointerest currency, not a commodity. Outlook good despite shorterm overhead supply. China will not revalue yuan anytime soon, A good currency to hold for longterm. Rand looks lower vs US$. •••Warren Buffett increased his bet against the US$ by $1bil in 2nd qtr. ••FT columnist Martin Wolf says:“US on a comfortable path to ruin.” Says deficits & debt are
destroying US credit & global currency role. Concludes: on present trends, in 10yrs the US will have lost control over its economic fate. Says a substantial devaluation of $ is needed. Says: “Politicians wait ’til crises hit. Statesmen foresee& act to prevent. Will an economic statesman emerge from the election. I fear not.”