The declining dollar

[jecrittenden]

Not necessarily a trading question but what is the best currency or currencies to park some reserve funds in to keep it's value from deteriorating in USD's?

 

[grantx]

Jec,

This is not a question I'd expect from a Texan.

Are you exposed to, or have any liabilites in, any foreign countries? This is where your dollar risk lies.

Domestically, inflation is the only(?) risk to your currency (the dollar). One solution would be index-linked bonds, ie guarantee a fixed return above inflation. Gold is often touted as a hedge against inflation but I think it's too volatile and not something on which to bet your farm/ranch/oil well.

Grant.

 

[Rhody Trader]

To extend Grant's point, if you're exposure is in one or more other currencies outside the dollar, best to hedge there. If you just want to sustain the value of your holdings vis-a-vis other currencies then you're probably best off using a basket approach. Picking just one exposes you to the fluxuations of of that currency. If inflation is your concern, TIPS (Treasury Inflation Protected Securities) is a good option.

 

[grantx]

John,

TIPS - they're the ones (couldn't remember the US term so used the English term). Thanks, mate.

Grant.