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frugalista

Euros As A Good Hedge Against Inflation

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I am starting to think that putting my hard earned dollars into Euros is the best way to preserve their current buying power. I don't see a big inflation prospect in the Eurozone, since it is fairly solvent and big and heterogenous enough to withstand economic shocks.

Comments?

frugalista

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Some pundits are tipping 2006 as the year Italy sets itself free. Whether they do or not remains to be seen, but such speculation may have a negative effect on the Euro's value.

'Blair out, gold down, Italy to dump euro in 2006 prediction':

http://www.nzherald.co.nz/section/story.cf...jectid=10361756

4. Italy edges closer to euro exit

The Italian elections this northern spring will be the big European political event of the year. Prime Minister Silvio Berlusconi hasn't delivered the growth people want and can't survive another election. Romano Prodi will take charge of a floundering Italian economy as new leader. On the Nixon-in-China principle (that only a man of unimpeachable right-wing credentials could cosy up to China in the 1970s), only a former president of the European Commission can admit that euro membership has been a disaster, Italy hasn't coped and the only choice is to get out. Prodi might not do it in 2006, but he'll start the conversation.

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Some pundits are tipping 2006 as the year Italy sets itself free. Whether they do or not remains to be seen, but such speculation may have a negative effect on the Euro's value.

'Blair out, gold down, Italy to dump euro in 2006 prediction':

http://www.nzherald.co.nz/section/story.cf...jectid=10361756

Maybe italy leaving the eurozone would be a good thing for the euro!

frugalistsa

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Maybe italy leaving the eurozone would be a good thing for the euro!

frugalistsa

Also if the German Recovery/Property story comes true, dollar falls, the Iranian oil exchange is a success and/or ECB rates rise significantly.

I used to be a large euro holder (STRd in Holland), but 50% of that is now in gold and $CAD denominated mining shares.

Pent

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I am starting to think that putting my hard earned dollars into Euros is the best way to preserve their current buying power. I don't see a big inflation prospect in the Eurozone, since it is fairly solvent and big and heterogenous enough to withstand economic shocks.

Comments?

frugalista

I thought about doing this, but then worked out that it was difficult having a Euro account and also there was crap interest rates. So I bought some Euro shares in BASF - as I thought returns would be better. Yes it is more risky but if you choose a recommended blue chip then it is relatively safe.

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Where can I find more information?

You may find these websites useful:

www.londonstockexchange.com/etfs

www.ishares.net

www.ldrs.com

Exchange Traded Fund

Company code

iShares FTSE 100

ISF

iShares Euro 100

IEUR

iShares Euro 100 European Top 100

IEUT

iShares S&P500

IUSA

EURO Exchange Stoxx 50 LDRS

EUN

EURO Exchange Euro Stoxx 50 LDRS

EUE

Buying IEUR (london stock exchange) would be the easiest and safest way.

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I am starting to think that putting my hard earned dollars into Euros is the best way to preserve their current buying power. I don't see a big inflation prospect in the Eurozone, since it is fairly solvent and big and heterogenous enough to withstand economic shocks.

Comments?

frugalista

One word for you

GOLD

if your woried about inflation. if your worried about the dollar.

GOLD is the only word you need

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One word for you

GOLD

if your woried about inflation. if your worried about the dollar.

GOLD is the only word you need

I guess the two reasons I'm not into gold are:

1- looks like I have missed the main boom already.

2- how do you value gold? At least with stocks you have a P/E ratio and with housing you can look at the rental yield. Gold's not really a very productive thing so how do you know when to buy or sell?

frugalista

Edited by frugalista

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One word for you

GOLD

if your woried about inflation. if your worried about the dollar.

GOLD is the only word you need

After the stock market crash of 1987, gold fell for several years, losing around 2/5 of it's value.

I have no idea how the economic conditions compare, but I'd

keep some cash handy too.

Pent

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After the stock market crash of 1987, gold fell for several years, losing around 2/5 of it's value.

Pent

After the stock market low around 1987 the FTSE100 rose steadily until 2000. That's why gold fell at the same time - it tends to move contrary to stocks.

What's exciting now is the fact that stock markets and gold are rising together. Wait 'til the stock markets falter then gold will turn on its afterburners and go vertical!

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I guess the two reasons I'm not into gold are:

1- looks like I have missed the main boom already.

2- how do you value gold? At least with stocks you have a P/E ratio and with housing you can look at the rental yield. Gold's not really a very productive thing so how do you know when to buy or sell?

frugalista

You shouldn't fear that you have missed the boom. the point is that economic conditions are good for precious metals and poor for most other investments while conditions persist gold will only go higher.

like every other asset on the planet you value it in terms of money. take the nominal value of all money in existance in the world and the total amount of gold in existance. divide the number of dollars by oz of gold and that is the value your gold should command if and when the world reverts to a speci (gold backed currency (which fiat currency has done in every historical example) every year the governemt prints more money and your gold is "worth" more.

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Maybe italy leaving the eurozone would be a good thing for the euro! [frugalista]

Possibly, but there's no procedure in place so even if Italy was to make such a decision this year the ramifications would likely drag on for some years.

Have you thought of Swiss Francs?

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I assume IEUT pays no dividends, so you need the pound to devalue at ~4% (subject to your tax position) per year just to break even?

I suppose this is an argument for some well chosen Euro blue chips, but then surely the income of companies like BASF is so global, you may aswell buy ICI?

Fingers

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If inflation takes off, surely there will be no HPC?

Secondly, if it takes off wouldnt we all be better getting mortgaged to the hilt and letting inflation take a slice out of the debt?

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If inflation takes off, surely there will be no HPC?

Secondly, if it takes off wouldnt we all be better getting mortgaged to the hilt and letting inflation take a slice out of the debt?

Unless we have a 70's style stagflation.

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Euro is also a fiat currency.

Real interest rates are negative and have been so for quite some time. This is the reason why I converted to gold, 30% of my cash already. The Euro may appreciate this year considerably with respect to the dollar, however, keeping a Euro account does not at the moment provide any safety for inflation.

The prospect of +ve real interest rates appears to be doubtful at the moment. First I do not believe that the inflation is 2.2%, (This is an indicator of some selected price increases, not monetary growth). Secondly, house prices are overblown in some countries, such as Ireland and South Europe. People are heavily indebted and the economy can not withstand the high interest rates required (for +ve real interest rates).

The ECB does not care for savers, they only seem to care about GDP growth. I have lost confidence on the currency. Thus I am planning to continue investing on precious metals, on pullbacks. Others may share the

same opinion, which explains the rapid recent devaluation of the Euro compared to gold.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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