OK hypothetical. Say silver get stuck in the 40s for a while and the AUD tanks to say 70c. I would be seriously tempted to sell. But to buy what?? I Do NOT want to keep $$ in fiat but want something fairly liquid as would want to get back into silver at future date. My main strategy has been to use silver to get to gold but in this scenario I certainly would not look @ buying gold with my silver money. Anything else expected to go up in the case of a AUD crash? TIA
When you say the AUD tanks, what is it tanking against? Therein lies the answer to your question of what would go up in the case of an AUD crash. Savvy?
USD.. No I do not want to buy USD in ANY circumstance (unless its ASEs)... So apart from USD where would be a good place to put my money?
I agree and disagree. I agree that: - Capital is moving here - Australia is a lovely place to live - The USD is deflating - AUD/USD is up because the USD is down I disagree: - That capital inflows driving the AUD/USD exchange rate are not speculative. They are definitely in the form of "hot money" from the USD (and Yen) carry trade, borrow at 0% and invested in AUD at whatever the RBA decrees the interest rate is. That's risk free profits for banksters, not underlying strength in the AUD. And just like 2008, that very liquid "capital" can and will be pulled at the first hint of distress. - Further evidence that it is speculation fuelling the AUD rise is in the following chart, where the AUD is rising against the USD and the YEN, but falling (sinking) against the Euro, i.e. Yen and USD borrowed at zero interest, generating speculative demand for AUD and no speculative demand from the Eurozone where there is a cost on borrowing. [imgz=http://forums.silverstackers.com/uploads/852_aud_comparison.jpg][/imgz] - Neither has the USD been in a bubble. It is/has been the world's reserve currency in which all commodities are/were traded which gave it an underlying strength far beyond anything to do with the US economy or speculative interests. This is changing with the BRICS (Brazil, Russia, India, China & South Africa) now trading outside the USD regime for more and more things between themselves and diversifying out of US treasuries. This reduction in USD demand, along with the ongoing debt monetisation (money printing) by the US Federal Reserve Bank is bringing an end to the global reserve currency status of the USD. And I reckon this is evidenced by the tight trading range of the gold/oil ratio since the GFC. In other words, OPEC may sell in USD, but they are valuing their product in gold! Source: Bullion Barron (A member here I think - thanks) As an aside, the RBA bribed Asian politicians last year with printed up fiat currency in efforts to win foreign currency printing contracts. That's a fair bit of nonsense, imo. Anyway, that's the way I figure it.
The dollar is up against the euro. Looks to be the euro is falling somewhat less the US dollar. [imgz=http://forums.silverstackers.com/uploads/258_screenshot-detach_window-euro.png][/imgz] edit US dollar.
In such a scenario it would be dumb to sell your silver. But in case you are forced - say by gunpoint - to sell your silver and desperately needed to buy something else with your quickly depreciating fiat/idiot AU dollars i'd have to say buy into an oil ETF...
Thanx that was what I was looking for, the reason I am worried about the AUD is that I can see it getting hammered in a GFC2 scenario. In that case would not oil get hammered too as usage would be down due to lack of economic development?? Again thanx for your answer...
Like i said - it would be dumb to sell silver - but you set up the scenario... so since you excluded the possibility of protecting/increasing your wealth via gold or silver, the next best thing would be to look for a commodity that is looking to increase in value over the medium term as supply struggles to keep up with demand ... and oil comes to mind. Oil prices may definately get hammered down ito US dollars, but that should not be too much of a problem for you because: a) ito AU dollars the oil price will be looking good (as AU $ tanks relative to US $) b) the collapse in price of oil will only be temporary and will always go up again - at least relative to fiat it will But i still think PMs will be a much better hedge in any scenario during the short to medium term.
"so since you excluded the possibility of protecting/increasing your wealth via gold or silver," Silver in a different boat to gold.In a shtf situation silver would fall much more than gold.Silver is very volatile and speculative and offers a great way of gaining and losing money. In the recent gfc gold fell 20% ,silver fell at least twice as much.40%-60%
I don't know about the Switzerland of Asia, but the AUD is going to continue to increase in value over time. AU has the commodities that Asia needs to grow and that is not going to change. There will be ups and downs over time, but amount of commodities needed by China is so massive that even a sharp slowdown in the Chinese economy will probably not have a significant impact on AU. The growth in additional coal needed by China for 2011 (2012?), is equal to the entire production of AU. Again, that is just the growth. AU is in a very enviable position. Be grateful that the AUD is strong because that makes your other imported goods cheaper too.
The reason I have exclude Gold and silver is if there was a decline like the one in the chart below The POS would shoot up massively in AUD, but if I kept my silver the currency gains would slowly errode away as the AUD gained parity again (assuming it would). The Idea is to take advantage of a major slide in AUD against USD and keeping $$ in silver/Gold would not do that as like the graph I think it would be a temporary imbalance. Ideally I would like to get back in in the mid 90s, but this assumes no meteoric rises in th POS ove a time period of ~8mo... unlikely More and more I am coming to the conclusion that there is no way to play this and hanging into silver is the best way and if an opportunity like the above scenario comes around the only thing to do would be ride it out.
