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Thursday, December 17, 2009

More evidence to support a strong USD

The attached article from is a highly tehnical one but I highly recommend reading it.

Essentially the argument the article presents is that their are a whole host of countries in far worse financial condition even than the United States which lends weight to a potential rebound in the USD.

The markets have an excellent ability of doing what everyone expects it not to do. Right now there remains a fair degree of pessimism towards the US Dollar.

In the long run all paper currencies fail and the financial system we have today will like all paper money systems throughout history. The reason being that paper money is nothing more than a promise to repay, the only problem being that the only method of repaying is to print more money (or get banks to create it through new loans).

My positive view on the USD is a 1-2 year view. I think you can do very well out of this trade (please read my previous blogs for my view on the best way to trade this) however in the long run you want to be out of all paper currencies and into hard assets such as precious metals and mining and agricultural commodities, real estate etc. I would however would be cautious in buying these types of assets right now due to the extreme levels of optimism towards them.

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