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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Muthusamy SELVARAJU who wrote (6316)	5/13/2006 1:20:21 AM
From: RJA_	Respond to of 217847

Selva --Here is a good web site for world economy with a European slant, Der Invest Informant www.dinl.net It comes out of Berlin. As a proxy for just holding Euros, take a look at MERKX, I like it so far. What ever currencies do, metals do it better. Depending on how far along you feel we are in the run up, consider getting some. The gains have been much more dramatic than in currencies. One could argue the risks are more dramatic too. I feel we have a ways to go yet. Best wishes! RJA

To: Muthusamy SELVARAJU who wrote (6316)	5/13/2006 1:24:14 AM
From: energyplay	Respond to of 217847

Problem with the Euro as a reserve currency is it has be too volitile. Started at 115 per USD, down to 85, then up to 130. Here's why that is bad : If you are the lender, you don't mind the currency appreciating, since you get back more than you lent - This is however VERY bad for the borrower. On the financial side of most companies, it will get you fired. So credit worthy international companies will be reluctant to borrow large amounts long term in Euros. The danger of Euro appreciation against not only the USD, but the JPY yen, CAD Canadian dollar, RMB, etc. is too great. Buy Euros to hedge against a USD drop, certainly. Take the other side and owe Euros ? Maybe another time... Companies will borrow at a rough proportion to their Euro business, but they will be careful about overweight exposure. Not so with the Yen, RMB, etc. - who have keep more or less in line with other world currencies. Without these big, A and AA rated borrowers, how to you earn interest in Euros and get paid back ? If too many people want to buy Euros and then lend them, this will tend to push Euro interest rates down. So it could be a long time before Euro is near equivalent to the USD. The other factor is more specific : Parts of the UK financial industry don't care for the Euro - remember the Euro was part of a plan to shift the center of European and world finance from London to Frankfurt and Paris. These guys would be happy to put a stick in the wheel of the Euro at key moments, and might get some help from some US firms to do so. I will give you fact number 3 - Maybe the Europeans don't want the Euro to be the new world reserve currency. It really limits policy flexibility. It can have you exporting jobs for years.... I would consider mostly metals and energy. The interest rates are lower, but it is easier to avoid capital loss. Of course, I expect the value of all paper currencies to decline relative to real stuff.