Sam, the main problem is, nobody will take a Zloty unless you tell them what it is in something they understand. By pegging to something reasonably solid, i.e., gold, the dollar, the yen, the Swiss franc, the D-mark, the Pound Sterling, you gain instant respect. Nobody would buy Argentine money until they pegged to the buck. Ditto for most other countries.
The problem comes when the US is inflating financial assets, creating a wealth of dollars that have nowhere to go. Exporting countries end up holding dollars, as the US is sending this worthless paper overseas in exchange for foreign resources. But, since they don't want to buy US products the same way they want to sell their own, the inventory just builds up. Nobody keeps a huge inventory of Zlotys or most 3rd world currencies, which makes it difficult for them to run at the same speed as the buck.
Anyway, I think Hong Kong is way overpriced. I last bought it about 40 pct. lower than where it is today, but it wasn't part of Red China then. I do believe there will be at least one attempt at a manipulated rally before the Chinese show their true colors and take HK down in favor of Shanghai. But longer term, I see no longer term. MB |
