Validations that the US Dollar will Fall More

by | Oct 15, 2007 | Archives

Our Canadian friends just celebrated their Thanksgiving and they have a bit more to be thankful for than our US readers as the Loonie remains strong and the US dollar continues to fall.

There are three validations to the numerous warnings we have sent about a weakening greenback.

First last month Jyske Bank warned that the dollar euro rate of 142 was a resistance level to watch for and if the dollar breached this it could fall more. The dollar breached that level last week.

Let me hasten to add that Jyske”™s forex analysts are still positive the greenback short term. They wrote in their last analysis:

“œEURUSD reached new highs during the past week and the USD  market is still bearish on USD and weIndex hit a new all-time low.   The believe that we might see 142 or even 142.50 against EUR in the coming weeks.   USD is anti-cyclical, and we believe that USD will strengthen as theHowever, US economy starts showing severe signs of weakening. But it might be several weeks before these signs turn up.”

However in the longer term we have other validations of US dollar weakness.  One comes from Alan Greenspan former Fed Chairman who while out stumping his book said that the Fed will have to raise interest rates to double-digit levels in coming years to thwart inflation.

His point was that at some point, the flow of farmers into the workforce in emerging markets like China will slow, leading to stronger wage pressures and prices, he says.

He is not talking about decades ahead either. He said that the shift “may be upon us sooner rather than later.”  He suggests that in the “next few years,” inflation will build unless action is taken.

Greenspan’s comments came as the Fed lowered rather than raised rates. This creates dollar weakness.

Greenspan has also focused on his biggest concern: The retirement of the baby boomers and the impending fiscal problems caused by the draws on Social Security and Medicare. He considers it an urgent problem that needs to be addressed soon. If it is not expect more dollar weakness.

We are seeing the buck wilt everywhere.  The Canadian dollar has risen over 60% versus the dollar in the last five years to once again reach parity.

Now a Bloomberg article “œAustralia Dollar to Trade Equal With U.S. Currency, by David McIntyre says:

“œThe Australian dollar will trade equal with the U.S. currency by the end of 2008 as the central bank raises interest rates to control inflation, according to Stephen Koukoulas, global strategist at TD Securities Ltd.

The local dollar, which reached an 18-year high of 89.50 U.S. cents today, will rise to parity as the economy expands by more than 4 percent next year and inflation accelerates, Koukoulas said in a note to clients dated yesterday. The currency will climb by more than 12 percent as the Reserve Bank of Australia raises its benchmark rate from an 11-year high of 6.5 percent, he said.”

Our multi currency portfolio tracking also shows the recent effect of the dollar”™s fall as our Dollar Short Portfolio has surged ahead of our Dollar Neutral Portfolio performance.  Here is their recent performance.

Portfolios 2007Mar 27June 28July 20Aug 17Sept 28
Dollar Short20.12%33.81%40.31%9.14%42.71%
Dollar Neutral16.58%37.64%38.07%13.56%34.74%

Until June, the dollar short portfolio was outperforming the dollar neutral. Then when the US stock market crashed”¦so did the greenback.  Wall Street has seen a rebound. The buck has not.

This year the five portfolios we track are up in the past eleven months:

Portfolios 2007Mar 27June 28July 20Aug 17Sept 28Oct 5
Swiss Samba16.15%44.80%45.84%15.19%44.40% 47.94%
Emerging Market12.81%54.31%67.67%30.50%103.22%105.22%
Dollar Short20.12%33.81%40.31%9.14%42.71%42.06%
Dollar Neutral16.58%37.64%38.07%13.56%34.74%37.10%

You can learn why this performance has taken place in a sixteen page email report about how 13 economic forces now clash to shape investments markets ahead that show the rewards and the risks.  The report also outlines the

five Multi-Currency Portfolios we are tracking in our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service. Details are at

Low Subscription Update. There is one last chance to take advantage of the low subscription fee.  The publisher we are working with conducted its first test market and just wrote to me.

“œ Gary , The price test at $249 didn’t win out.  We’d have to test it again to get a more conclusive result.”

This means that you can start your subscription at the low, existing $149 price only today.  To take advantage of this and save go to


P.S.  I have invited Peter Conradsen and  Henrik Villumsen from Jyske Bank to speak and be available for private consultations (no added cost) at the November 9-10 and 11, International Business & Investing  course in Cotacachi but have also.   Jyske Bank is one of the leading international investing and currency managers in the world. Their trading room process $50 billion of business a day. So this next course makes a huge amount of global investing information available to you.

We will introduce our 208 portfolios at the November courses. Join us at our Hotel Meson de las Flores for our next three courses or just the International Business & Investing Made EZ in Ecuador , November 9-10 and 11.

We also invest in global real estate and one of our purchases is the hotel, El Meson de las Flores , where we conduct our courses.

Delegates love the warm, colonial atmosphere so conducive to learning, the friendly staff and really low room rates ($49 to $69 plus 22% service and tax).   This includes a delightful and huge breakfast including fresh squeezed tropical juice, fresh fruit, granola or quinoa, eggs, ham or bacon, toast and coffee, tea or herbal tea served Al Fresco in the sunny courtyard.  Ecuador ‘s weather in November is normally perfect, 50 degrees at night and mid 70s during the day with full sunshine…a nice break from northern autumn’s grey.


You can see more about El Meson, where you can stay (subject to availability) during the course at

Join us in Ecuador for all three of our November courses and save $398. See