USD vs. Other Currency & Purchase Venue

[mikie007]

I'd like to ask an investor group in another hemisphere for their prospective and suggestions on where they might place their retirement funds in these troubled times. I'm a US citizen living near Boston who retired this past week and received my retirement package check that I placed in my newly opened brokerage account. I plan to live off these funds of about $350K US, all I have, for hopefully several years by finding appropriate investment vehicles for income and slowly drawing down the base funds as needed to live simply. My situation is just like other retired folks are faced with around the world and you will likely also have to deal with someday. However, nothing is simple and straight forward especially with today's international events taking place. I know that I am not a sophisticated investor but have dabble without much success speculating over the years.

Question: how would you protect your retirement funds from 1. Currency Devaluation - in my case, the shrinking USD which decrease in value may be greatly accelerated, and 2. Selection of what kind of Investments should be purchased and in what currency on what exchange over the next 18 months? Let me add a twist and a little spice to this mix that has been keeping me up at night.

I predict that a Israel (USA likely implicated by reference and/or deed) sparked war with Iran will occur shortly driving Oil prices out of sight and impacting world supply. I had a taste of what it means to have oil shortages and high prices in the USA during the 1970's and what it meant to everyone then. Today, I hesitate to predict what such would do to a very unprepared and unaware USA, but I will say it will not be pretty, IMHO. Further, PeakOil conditions could be accelerated during and after the Iran events which will pose a international dilemma of near Biblical proportions. Please consider war actually happening in the face of all the great arguments that it will not happen and oil pricing will be $100+ a barrel. I strongly feel these evens will cause the USD to free fall against world currencies like has never been seen before.

So, just fantasize for a moment that you have just retired. How would you handle your very own AUD funds if the AUD was under attack in a similar fashion as the USD? Does it matter what currency - AUD, EURO, USD , etc. you keep your investments and funds in? Which world currency will have the best benefits in the war scenario I foresee? What investments might you make? Should you buy domestic or international securities and of what kind? Should the Energy sector be avoided or highlighted? What part should Gold and FX play in the strategy? Which exchange would be best to use for purchasing investment instruments - USA, ASX, London, Munich, Toronto, etc.? Is it important which country your chosen investments administrative home office has its headquarters in - Australia, Brazil, China, etc. or in what currency the investment is bought in? I am still unclear on and wonder what would happen to a foreign investments value if you buy that foreign security traded on your local exchange in you county's currency. What are the ramifications to the value if deflation occurs? What have I forgotten and not taken into consideration? I have so many question and so little time. I ask for your Aussie opinions, comments, and help that I will factor into my strategy for investment direction and venue for my financial future. Never did I think I would have to be a international economist, scholar and wizard to retire and survive.

Thank you all in advance for any comments and opinions you may share.

Mike

 

[bvbfan]

Question: how would you protect your retirement funds from 1. Currency Devaluation - in my case, the shrinking USD which decrease in value may be greatly accelerated,

Don't know what investment options are available in the US but you could buy assets with an inverse correlation to the USD, I would have suggested gold but it seems to have delinked from the usual correlation.
You could invest in non USD denominated assets ie in other countries
Also you could buy protection against USD through bought calls/puts

and 2. Selection of what kind of Investments should be purchased and in what currency on what exchange over the next 18 months?

Without actually providing advice, maybe multinationals with most of their income earnt outside the US (and not in USD) might be an option if you are bearish the USD

So, just fantasize for a moment that you have just retired. How would you handle your very own AUD funds if the AUD was under attack in a similar fashion as the USD? Does it matter what currency - AUD, EURO, USD , etc. you keep your investments and funds in? Which world currency will have the best benefits in the war scenario I foresee?

I'm not a currency expert but the Swiss franc has been seen as a safe haven, maybe also other currencies with trade surpluses (middle eastern currencies?)

I can't say which is the best exchange or asset to invest in, it all depends on what the economies of the US and China do
Personally I think we will be ok until 2007 but China and India will stay strong, the west I'm a bit more worried about.
I still like gold, although I am not too confident to predict any major rises until 2nd half of the year.

As to domicile of companies and where to buy, location of the company and where its listed will all have issues. ASX materials companies tend to trade at a discount to its peers in Europe or USA
I'd look at the ADRs of some these companies like BHPBiliton (BHP), Rio Tinto (RTP), CVRD (RIO), Petrobas (PBR), Buenaventura (BVN) that are listed in the US

As for deflation, well its been 70 years since we last really saw it, and I don't think we can predict what would happen but a lot of people will be hurt.

 

[excalibur]

Hi Mike,

There isn`t anything in the world that I hate so much than speculating in a specific currency. Its like gambling in Las Vegas. There are so many impredictable factors that are much more dangerous than a simple little war.
Once upon a time, there was a very strong Swiss Franc, but those days are long over. IOP Switzerland is just as vulnerable economically as anyother country in europe. If you really want to bunker your money in a foreign currency. Then I would say the chinese Yuan.
Sounds crazy?
Well look at the facts.
1)There is no currency that is not so undervalued as the Yuan.
2)China`s stubbornes to flexibilize the currency politics is world renowned.
(and where you find a strong and stubborn goverment, you will find a strong economy)
3)The quantity of commodities such as gold in China is unknown? or dangerously overwhelming that could bring the world economy down to its knees. ( maybe thats why the americans don`t really mess around with them very much).
4) The chinese are not only potentially strong economically because of there growth...NO!!!: Qualities such as determination, unity and correct-behaviour fail to be found in other countries of the world like in China.

Of course oil will propably jump to 80 or maybe 100$ a barrel...but for how long?????Gazing at certain western countries other than the US or Canada, investments in alternative-energies such as solar and wind are on the on-march. And thats scaring the hell out of the arabs! (Or maybe they have alrealdy long thought about alternatives themselves?????)

Questions, questions, questions...
My last advice: If you don`t know how the future will be...then analyze the past and the present...believe me :that`s already a great deal!!!