In the world of currencies, one thing is a given is that 'value' is constantly shifting. Over the last three months, we have seen a significant appreciation in the US-dollar (USD) with massive capital inflows into the US banking system & economy.
Of interest, the USD price of gold bullion has actually held steady during this dramatic USD currency price increase staying close to the 1250 USD level. As measured in other currencies, gold has slightly risen in value. For example, as priced in Canadian dollars, gold is in the $1360 to $1400 CAD level per ounce of gold.
Of short term immediate consequence for gold bullion is the scheduled vote on November 30, 2014 by Swiss voters in a referendum to either approve or disapprove a ballot measure to increase the Swiss central bank reserves from its current 7.7% gold bullion holdings of $550 billion total reserves to a 20% ceiling. If a YES vote takes place, there is a greater chance that Switzerland may ultimately go ahead and purchase over the next 5 years upwards of 1500 tonnes of gold bullion to satisfy the 20% threshold. The Swiss franc will indeed truly be one of the world's only gold back safe haven currencies. The price of gold bullion will also get a price boost from this demand shock.
For those planning holiday schedules.
CHEAP CURRENCIES - that is, great value for your money remain Russia, Turkey and South Africa. All three currency zones have their domestic currencies at around 50% undervalued to the USD. Other attractive currency zones include Mexico, Hungary, Poland and South Korea.
EXPENSIVE CURRENCIES: our list still have Switzerland as the most expensive and the world's most expensive industrialized currency zone as measured by purchasing power parity. Other big money expensive currency zones include Norway, Denmark and surprisingly Australia as the AUD remains at 10% overvalued even after commodity price correction.
Final comment, the dramatic drop in oil price has knocked the value of the Canadian dollar down along with the Russian ruble, etc.. The CAD still remains even with this large price correction in commodities still overvalued at today's level by 10%, risk remains for the CAD to drop to the low 80 US cent level in year 2015 from the current 89 to 90 US cent level.
Wednesday, October 29, 2014
Tuesday, June 10, 2014
Gold & Silver USD price Break Out is Imminent
Gold has stagnated trading in a flat line now for the last few months in the 1250 to 1325 USD / ounce
price range - more recently trading in the 1250 USD / oz price.
In early June 2014, a modest earthquake hit the markets with the European Central Bank (ECB) deciding to lower two key interest rates. The ECB refinancing rate goes to plus 0.15% down from 0.25%. However, it is the ECB's decision to move the interest rate for banks depositing monies with the ECB to negative 0.1 percent, this policy move is the initial fuel to start a major fire within the global gold market.
That is, banks now pay the ECB to hold their money instead of receiving interest. The central bank is implementing this negative rate to try and encourage European banks to lend the money to help foster economic growth within the currency union.
With current inflation in the Eurozone at 0.5%, well below the 2% target, the central bank is now pulling several levers to stimulate the velocity of money and encourage domestic inflation within the common currency zone.
Also, keep your eye on the U.S. Federal reserve to perhaps surprise the markets in July 2014 with a pause on tapering. This too would add much bullish sentiment to USD gold price going forward with silver following the trajectory of gold but likely at a faster velocity of USD price rise then gold.
In our view, we believe that gold is now very close to a major turn back north in price towards 1400 to 1500 USD / oz by year-end 2014. By year 2016 - 2017, inflation will return to modest levels within the United States and Europe, thus we expect gold prices to be over 1700 USD.
Finally, gold priced in other currencies such as Canadian will account for CAD dollar depreciation, expect much higher CAD dollar gold prices going forward. Over the last year for example, CAD gold is only down 3.4% whilst USD price gold is down 9.73%. Our research suggests a medium term floor price for the CAD further depreciating to the 83 US cent level. If the oil market makes a major turn south in price, this forecast could be further revised downward with a new floor in the mid 70 USD cent range for each CAD.
A quick general snapshot on currency valuations shows heightened risk for the Swiss franc (CHF) with the CHF maintaining upwards of a 55% purchasing power overvaluation to USD. A good time to buy gold in CHF is right now. Conversely, the Turkish lira is upwards of 50% undervalued to the USD, a good time to accumulate and hold lira currency in our view.
For further research on currencies, please visit us at: http://www.bankintroductions.com
price range - more recently trading in the 1250 USD / oz price.
In early June 2014, a modest earthquake hit the markets with the European Central Bank (ECB) deciding to lower two key interest rates. The ECB refinancing rate goes to plus 0.15% down from 0.25%. However, it is the ECB's decision to move the interest rate for banks depositing monies with the ECB to negative 0.1 percent, this policy move is the initial fuel to start a major fire within the global gold market.
That is, banks now pay the ECB to hold their money instead of receiving interest. The central bank is implementing this negative rate to try and encourage European banks to lend the money to help foster economic growth within the currency union.
With current inflation in the Eurozone at 0.5%, well below the 2% target, the central bank is now pulling several levers to stimulate the velocity of money and encourage domestic inflation within the common currency zone.
Also, keep your eye on the U.S. Federal reserve to perhaps surprise the markets in July 2014 with a pause on tapering. This too would add much bullish sentiment to USD gold price going forward with silver following the trajectory of gold but likely at a faster velocity of USD price rise then gold.
In our view, we believe that gold is now very close to a major turn back north in price towards 1400 to 1500 USD / oz by year-end 2014. By year 2016 - 2017, inflation will return to modest levels within the United States and Europe, thus we expect gold prices to be over 1700 USD.
Finally, gold priced in other currencies such as Canadian will account for CAD dollar depreciation, expect much higher CAD dollar gold prices going forward. Over the last year for example, CAD gold is only down 3.4% whilst USD price gold is down 9.73%. Our research suggests a medium term floor price for the CAD further depreciating to the 83 US cent level. If the oil market makes a major turn south in price, this forecast could be further revised downward with a new floor in the mid 70 USD cent range for each CAD.
A quick general snapshot on currency valuations shows heightened risk for the Swiss franc (CHF) with the CHF maintaining upwards of a 55% purchasing power overvaluation to USD. A good time to buy gold in CHF is right now. Conversely, the Turkish lira is upwards of 50% undervalued to the USD, a good time to accumulate and hold lira currency in our view.
For further research on currencies, please visit us at: http://www.bankintroductions.com
Friday, December 20, 2013
Cheap and Expensive Currencies
The Turkish Lira is currently hitting a record low to the US dollar at 2.095 TL whilst as measured by purchasing power parity, the lira remains at just over 50% undervalued to the US dollar (USD). If one earns USD as income, then Turkey remains a favorable spot for inexpensive travel.
The Russian ruble is also tremendously undervalued to the USD at approximately 45%. Tourist travel to Russia is affordable in most places as restaurant meals, souvenirs - gifts etc will provide for a bonus purchasing power for those with US dollars. A good restaurant meal with wine will likely set two diners back around $60 to $70 USD in many parts of Russia while the same equivalent type meal in the United States will be just over $100 USD.
South Africa is another country that provides for a sale on its currency for tourists.
Venezuela's currency is in free fall - hard currency is in significant demand as the local currency bolivar is now at threat to very high inflation.
Expensive currencies have Switzerland at the top of the list as the Swiss franc (CHF) is upwards of 60% overvalued to the USD as measured by purchasing power parity. A good restaurant meal with wine in Switzerland would be closer to $200 USD for two.
Norway is another expensive country to visit as is Australia. The Australian dollar is about 30% overvalued to the USD.
It should be noted that currencies can remain offside with purchasing power parity for several years but eventually they do ultimately correct in value.
For now, Turkey remains again for another year as one of the most affordable places to visit as measured by purchasing power parity currency valuations.
The Russian ruble is also tremendously undervalued to the USD at approximately 45%. Tourist travel to Russia is affordable in most places as restaurant meals, souvenirs - gifts etc will provide for a bonus purchasing power for those with US dollars. A good restaurant meal with wine will likely set two diners back around $60 to $70 USD in many parts of Russia while the same equivalent type meal in the United States will be just over $100 USD.
South Africa is another country that provides for a sale on its currency for tourists.
Venezuela's currency is in free fall - hard currency is in significant demand as the local currency bolivar is now at threat to very high inflation.
Expensive currencies have Switzerland at the top of the list as the Swiss franc (CHF) is upwards of 60% overvalued to the USD as measured by purchasing power parity. A good restaurant meal with wine in Switzerland would be closer to $200 USD for two.
Norway is another expensive country to visit as is Australia. The Australian dollar is about 30% overvalued to the USD.
It should be noted that currencies can remain offside with purchasing power parity for several years but eventually they do ultimately correct in value.
For now, Turkey remains again for another year as one of the most affordable places to visit as measured by purchasing power parity currency valuations.
Friday, September 20, 2013
Currency Valuations for Travel Ideas - Fall 2013
For most of us, the total cost of a vacation is likely the number one reason for choosing a holiday destination. If one is just looking at currency valuations, here are three countries you may want to consider: Russia, Argentina and India.
The Russian ruble is now approximately 40% undervalued to the USD. This time of year, one can also find for the most part reduced airline ticket prices. If you can get a half decent deal on a flight, then most likely hotel prices & food are likely to be at a significant discount if you arriving from a USD, EUR, JPY, GBP CAD currency zone for example.
The Indian rupee has experienced a dramatic decline of over 20% during the summer. What about Argentina? Local currency chaos as usual. Not good if you are earning income and living full time in Argentina based on currency purchasing power parity, but a terrific deal if you are tourist visiting the country. In Argentina, you will be fine dining at a fraction of the cost of your home currency zone country.
So skip the usual spots in Western Europe to North America and go somewhere exciting & exotic like India, Argentina and Russia!!
The Russian ruble is now approximately 40% undervalued to the USD. This time of year, one can also find for the most part reduced airline ticket prices. If you can get a half decent deal on a flight, then most likely hotel prices & food are likely to be at a significant discount if you arriving from a USD, EUR, JPY, GBP CAD currency zone for example.
The Indian rupee has experienced a dramatic decline of over 20% during the summer. What about Argentina? Local currency chaos as usual. Not good if you are earning income and living full time in Argentina based on currency purchasing power parity, but a terrific deal if you are tourist visiting the country. In Argentina, you will be fine dining at a fraction of the cost of your home currency zone country.
So skip the usual spots in Western Europe to North America and go somewhere exciting & exotic like India, Argentina and Russia!!
Thursday, May 9, 2013
Currency Turbulence Remains Very Prevalent
ARGENTINA: the peso is in trouble. The black market rate now sliding through 10 pesos to the USD this week, the official rate is 5.2. Inflation is high, public policy is interfering the market, business confidence is suffering coupled with currency controls.
VENEZUELA: the Chavez regime recently re-elected under a new leader on the slimmest of margins is up against the wall on the economy. The country is on the verge of a significant political crisis.
High inflation is resulting in a bolivar currency that is steadily declining in value. Paper currencies and devaluations are a time tested story that is frequently repeated in Latin American history. Venezuela like Argentina is suffering from ill advised public policy decisions.
JAPAN: the yen breached the 100 JPY to the USD level for the first time in four years this week. Several analysts are now targeting 125 JPY as the next level of decline. The yen is in decline due too massive government fiscal stimulus and an aggressive central bank policy aimed at depreciating the yen in hopes of stimulating inflation. The country has been fighting deflation forces for 20 years with stagnant growth. The challenge now are many which include massive increasing national debt as a percentage of GDP upwards of 500% by some measures. A declining & aging population coupled with a strict rigid immigration policy. Japan is slowly turning the switch back on for nuclear energy after the devastating earthquake & tsunami from a couple of years ago which essentially shut the domestic nuclear power industry offline. This removal of nuclear energy has resulted in a sharp increase in liquefied natural gas (LNG) imports which is impacting Japan's current account. Expect more yen depreciation ahead. One idea the Japanese authorities may wish to investigate is to re-denominate the yen valuation from 100 JPY to 1 JPY in relation to the USD. This may help to boost domestic consumption as citizens rush to replace mattress old JPY with new JPY banknotes.
BITCOIN: the new virtual currency that has hopes of replacing paper currency whilst minimizing transaction costs for payment settlements. Now there is talk of U.S. authorities interfering with regulation - quite ironic since the currency was designed to avoid central government control.
Protect yourself, diversify your wealth amongst several of the world's most stable currencies. Visit http://www.bankintroductions.com for further knowledge.
VENEZUELA: the Chavez regime recently re-elected under a new leader on the slimmest of margins is up against the wall on the economy. The country is on the verge of a significant political crisis.
High inflation is resulting in a bolivar currency that is steadily declining in value. Paper currencies and devaluations are a time tested story that is frequently repeated in Latin American history. Venezuela like Argentina is suffering from ill advised public policy decisions.
JAPAN: the yen breached the 100 JPY to the USD level for the first time in four years this week. Several analysts are now targeting 125 JPY as the next level of decline. The yen is in decline due too massive government fiscal stimulus and an aggressive central bank policy aimed at depreciating the yen in hopes of stimulating inflation. The country has been fighting deflation forces for 20 years with stagnant growth. The challenge now are many which include massive increasing national debt as a percentage of GDP upwards of 500% by some measures. A declining & aging population coupled with a strict rigid immigration policy. Japan is slowly turning the switch back on for nuclear energy after the devastating earthquake & tsunami from a couple of years ago which essentially shut the domestic nuclear power industry offline. This removal of nuclear energy has resulted in a sharp increase in liquefied natural gas (LNG) imports which is impacting Japan's current account. Expect more yen depreciation ahead. One idea the Japanese authorities may wish to investigate is to re-denominate the yen valuation from 100 JPY to 1 JPY in relation to the USD. This may help to boost domestic consumption as citizens rush to replace mattress old JPY with new JPY banknotes.
BITCOIN: the new virtual currency that has hopes of replacing paper currency whilst minimizing transaction costs for payment settlements. Now there is talk of U.S. authorities interfering with regulation - quite ironic since the currency was designed to avoid central government control.
Protect yourself, diversify your wealth amongst several of the world's most stable currencies. Visit http://www.bankintroductions.com for further knowledge.
Wednesday, December 5, 2012
Big Pussy Cat to Emerging Tiger - Philippines
The Philippines peso (PHP) is hitting close to a 5 year high in valuation when compared to the US-dollar (USD). On December 5, 2012, the peso closed at 40.85 PHP. The peso is now anchored by low inflation running at 2.8% (November 2012), a country very rich in natural resources (energy and mineral resources) and spearheaded by very competent political management under the leadership of President Aquino.
This is quite a currency appreciation move by the PHP. In August 2009, the peso was trading at 48.25 PHP to the USD, a gain of almost 16% when compared to today's valuation.
Keep your eye on the Philippines. Although vulnerable to typhoons as witnessed with yesterday's tragic storm strike on Eastern Mindanao Island (southern Philippines), the country is vibrant, economic growth is strong. Expect to see the political leaders to continue to invest in energy infrastructure, roads, health & education whilst maintaining a balance with the environment and industry growth in mining, energy and manufacturing sectors.
This time, the peso may very well continue to appreciate even further neglecting previous cyclical trading cycles. A more prosperous Philippines in the years is inevitable, indeed, an emerging tiger rooted in the country's rich natural resources.
For more information on currencies, please visit BankIntroductions.com:
http://www.bankintroductions.com/
This is quite a currency appreciation move by the PHP. In August 2009, the peso was trading at 48.25 PHP to the USD, a gain of almost 16% when compared to today's valuation.
Keep your eye on the Philippines. Although vulnerable to typhoons as witnessed with yesterday's tragic storm strike on Eastern Mindanao Island (southern Philippines), the country is vibrant, economic growth is strong. Expect to see the political leaders to continue to invest in energy infrastructure, roads, health & education whilst maintaining a balance with the environment and industry growth in mining, energy and manufacturing sectors.
This time, the peso may very well continue to appreciate even further neglecting previous cyclical trading cycles. A more prosperous Philippines in the years is inevitable, indeed, an emerging tiger rooted in the country's rich natural resources.
For more information on currencies, please visit BankIntroductions.com:
http://www.bankintroductions.com/
Friday, November 2, 2012
Travel: Look for Cheap Currency - TURKEY New Lira
In search of a place to travel that provides affordability, culture and a terrific climate. Look no further then the Republic of Turkey, situated as the gateway between Europe and Asia. Turkey is a democratic, secular nation that currently provides foreign tourists with a very cheap currency.
Why spend a fortune within European Union member countries such as France, Germany that function on the expensive Euroland euro (EUR) currency when one can enjoy a tremendous currency advantage with Turkey's cheap currency, the Turkish New Lira.
In January 2008, the Turkish new lira was trading at 1.175 TRY to 1 US dollar (USD). Today, almost 5 years later the new lira has dramatically declined in value to 1.8026 TRY to 1 USD. As measured by purchasing power parity, the TRY stands at 45 percent undervalued to the USD.
If you like Mediterranean climate, historical culture, beautiful scenery, exotic beach resorts and an inexpensive currency, take a look at Turkey!
Why spend a fortune within European Union member countries such as France, Germany that function on the expensive Euroland euro (EUR) currency when one can enjoy a tremendous currency advantage with Turkey's cheap currency, the Turkish New Lira.
In January 2008, the Turkish new lira was trading at 1.175 TRY to 1 US dollar (USD). Today, almost 5 years later the new lira has dramatically declined in value to 1.8026 TRY to 1 USD. As measured by purchasing power parity, the TRY stands at 45 percent undervalued to the USD.
If you like Mediterranean climate, historical culture, beautiful scenery, exotic beach resorts and an inexpensive currency, take a look at Turkey!
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