Safe Forex Havens in an Overpriced World
http://www.theforexnittygritty.com/forex/safe-forex-havens-in-an-overpriced-world
There appears to be too much cash chasing too few assets all over the world. The inherent risk in this situation is that one or more asset bubbles will collapse taking the world or at least many national economies with it. Thus we look for safe Forex havens in an overpriced world. What happened? How will $10,000 an acre Iowa farms and $240 million London apartments affect currencies and relative foreign currency rates? Read on for our take on safe Forex havens in an Overpriced World.
Asset Bubbles Everywhere
There has been a competitive devaluation of Forex currencies going on for at least a year. More and more central banks are buying other currencies, setting low interest rates, or running up debt as a means of reducing the value of the home currency. Some nations are essentially printing money to increase the money supply and keep their economies from tanking. It used to be that Japan, followed by Taiwan, followed by China did this to keep their currencies cheap in order to gain a competitive advantage in exporting to the West. But, in the aftermath of the worst recession in three quarters of a century the USA and European Union, the two largest economies in the world jumped on board this train. We posed the question, who will win this competitive devaluation of currencies? And how can a Forex trader make a profit? Now as the devaluation of currencies via expansion of asset bubble expands should those with assets look for safe Forex havens in an overpriced world?
Interest Rates and Return on Investments
When the prices of things go up the rate of return on investment commonly suffers. When interest rates on bonds fall the prices of bonds commonly rise. What happens when interest rates go up? What happens when banks demand their money on non-performing loans that occur because someone borrowed way too much money to buy an asset that does not make enough money to support the principal and interest required to pay back the loan?
Fear of Currency or Currencies
Gold was the safe haven for many as it rose from $200 an ounce to $19,000 an ounce and now even gold bugs are thinking twice as gold hovers in the $1,300 an ounce range. So, folks with money are bidding up Iowa farm land, apartments in London and many other overpriced assets. This in many ways appears to be a flight from currency. But if you want to keep your money what are safe Forex havens in an overpriced world? A useful way to look at this is to look at where direct foreign investment is going. Take a look at a bit of useful info from the 2013 United Nations World Investment Report.
Visit www.TheForexNittyGritty.com to see the report.
THE OBSTACLES THAT IMPEDE THE DEVELOPMENT OF BRAZIL IN THE CONTEMPORARY ERA A...
Safe Forex Havens in an Overpriced World
1. Safe Forex Havens in
an Overpriced World
Will Overpriced Assets from
Iowa to London Damage Currencies?
2. There appears to be too much cash
chasing too few assets all over the
world.
3. The inherent risk in this situation is that
one or more asset bubbles will collapse
taking the world or at least many
national economies with it.
4. Before We Continue…
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5. Thus we look for safe Forex havens in
an overpriced world.
6. What happened? How will $10,000 an
acre Iowa farms and $240 million
London apartments affect currencies
and relative foreign currency rates?
7. Read on for our take on safe Forex
havens in an overpriced world.
9. There has been a competitive
devaluation of Forex currencies going
on for at least a year.
10. More and more central banks are
buying other currencies, setting low
interest rates, or running up debt as a
means of reducing the value of the
home currency.
11. Some nations are essentially printing
money to increase the money supply
and keep their economies from tanking.
12. It used to be that Japan, followed by
Taiwan, followed by China did this to
keep their currencies cheap in order to
gain a competitive advantage in
exporting to the West.
13. But, in the aftermath of the worst
recession in three quarters of a century
the USA and European Union, the two
largest economies in the world jumped
on board this train.
14. We posed the question, who will win
this competitive devaluation of
currencies? And how can a Forex
trader make a profit?
15. Now as the devaluation of currencies
via expansion of asset bubble expands
should those with assets look for safe
Forex havens in an overpriced world?
17. When the prices of things go up the
rate of return on investment commonly
suffers.
18. When interest rates on bonds fall the
prices of bonds commonly rise. What
happens when interest rates go up?
19. What happens when banks demand
their money on non-performing loans
that occur because someone borrowed
way too much money to buy an asset
that does not make enough money to
support the principal and interest
required to pay back the loan?
21. Gold was the safe haven for many as it
rose from $200 an ounce to $19,000 an
ounce and now even gold bugs are
thinking twice as gold hovers in the
$1,300 an ounce range.
22. So, folks with money are bidding up
Iowa farm land, apartments in London
and many other overpriced assets.
23. This in many ways appears to be a
flight from currency.
24. But if you want to keep your money
what are safe Forex havens in an
overpriced world?
25. A useful way to look at this is to look at
where direct foreign investment is
going. Take a look at a bit of useful info
from the 2013 United Nations World
Investment Report. – shown in two
parts.
26. Foreign Direct Investment Comparison of 2007 and 2012
In Billions of USD
Taken from the United Nations World Investment Report 2013
Nation 2007 2012
European Union 859 323
UK 200 71
France 96 37
Germany 80 67
North America, incl.
Mexico
363 408
Canada 117 54
USA 216 329
27. Mexico 31 26
Japan 23 123
China 84 84
China, Hong Kong 62 83
South Korea 9 33
India 25 9
South Africa 6 4
Russian Federation 57 51
Brazil 35 -3
28. Money today is flowing into The USA,
Japan, South Korea and Hong Kong.
29. If where investment is going is a
measure of safe haven Forex trading
look to the currencies of the USA,
Japan, Korea and Hong Kong as safe
Forex havens in an overpriced world.
30. As always do your own homework and
be suspicious of Forex tips.
