Year End Thoughts on Forex, the Economy, Real Estate, and Gold

Posted on So 30 Dezember 2007 in misc • 4 min read

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  • Yuan meta: podPressPostSpecific: a:6:{s:15:"itunes:subtitle";s:15:"##PostExcerpt##";s:14:"itunes:summary";s:15:"##PostExcerpt##";s:15:"itunes:keywords";s:17:"##WordPressCats##";s:13:"itunes:author";s:10:"##Global##";s:15:"itunes:explicit";s:2:"No";s:12:"itunes:block";s:2:"No";} _aioseop_keywords: AUDUSD, EURJPY, Forex, USD, Yen, Yuan, Kiwi, Curencies ysc_entity_script: YAHOO.Shortcuts.annotationSet=YAHOO.Shortcuts.annotationSet||{};YAHOO.Shortcuts.annotationSet[\'lw_1199062066_0\']={\"text\":\"London\",\"weight\":0.25,\"type\":[\"shortcuts:/us/instance/place/destination\",\"shortcuts:/us/instance/place/gb/town\"],\"category\":[\"PLACE\"],\"metaData\":{\"geoArea\":\"1390.88\",\"geoCountry\":\"United Kingdom\",\"geoCounty\":\"Greater London\",\"geoIsoCountryCode\":\"GB\",\"geoLocation\":\"(-0.12715, 51.506321)\",\"geoName\":\"London\",\"geoPlaceType\":\"Town\",\"geoState\":\"England\"}};YAHOO.Shortcuts.annotationSet[\'lw_1199062066_1\']={\"text\":\"China\",\"weight\":0.378195,\"type\":[\"shortcuts:/us/instance/place/cn/country\",\"shortcuts:/us/instance/place/destination\"],\"category\":[\"PLACE\"],\"metaData\":{\"geoArea\":\"9.3721e+06\",\"geoCountry\":\"China\",\"geoIsoCountryCode\":\"CN\",\"geoLocation\":\"(104.16565, 36.894451)\",\"geoName\":\"China\",\"geoPlaceType\":\"Country\"}};YAHOO.Shortcuts.annotationSet[\'lw_1199062066_2\']={\"text\":\"New Zealand Kiwi\",\"weight\":1.71066,\"type\":[\"shortcuts:/concept\"],\"category\":[\"CONCEPT\"]};YAHOO.Shortcuts.annotationSet[\'lw_1199062066_3\']={\"text\":\"Pakistan\",\"weight\":0.25,\"type\":[\"shortcuts:/us/instance/place/destination\",\"shortcuts:/us/instance/place/pk/country\"],\"category\":[\"PLACE\"],\"metaData\":{\"geoArea\":\"876758\",\"geoCountry\":\"Pakistan\",\"geoIsoCountryCode\":\"PK\",\"geoLocation\":\"(69.359703, 30.441851)\",\"geoName\":\"Pakistan\",\"geoPlaceType\":\"Country\"}}; author:

    The year is beginning to wind down and I'm looking forward to closing out my Forex trading with at least one position in AUDUSD and possibly a second in EURJPY if my buy order gets triggered when London opens. All this intervention by the banks can't stop the overall trend for currencies until they change their policies, whether politically or economically.

    So what does 2008 hold for the major currencies? Only time will tell as the new year unfolds but if things continue as they did this year, you should expect a further decline in the USD and hardly any appreciation of the Yen. I believe the Euro zone will eventually be tapped out, yes they're feeling the pinch of inflation but it won't hurt them too badly if they had to cut interest rates to spur thier slowing economy.

    The one currency to watch is the Chinese Yuan. I believe that next year we'll see a further appreciation of this currency relative to the USD as China must come to grips with its massive economic engine. No matter how powerful the sleeping Dragon is, nothing can hold back its currency from freefalls or meltups when the levy breaks. If you ask me, the immediate trend for the Yuan is UP but I suspect that China might enter into a period of stagflation if it doesn't reign in its massive inflation by free floating the Yuan.

    The Yen will probably do nothing next year, the Bank of Japan is still seeing a weak economy and is in no hurry to raise rates. The Australian Dollar and the New Zealand Kiwi are over inflated by all means. The Aussie D and Kiwi Yen crosses are by far some of the most favorite carry trade currencies out there and they have a high carry trade premium in their price. Sooner or later the Bank of Australia and the Bank of New Zealand will have to cut rates in response to a slowing global economy reeling from the subprime mess and when they do, watch out for the Kimono Traders! If I were a long term betting man, I might consider placing a short position for these pairs when the time is right. I still believe that AUDUSD will see parity next year before all hell breaks loose and she goes down for the count. Wishful thinking? Yes!

    The USD will continue to be doomed until we get rid of Bush and elect someone who has a humble foreign policy. No matter how much I like Ron Paul, and will vote for him, the reality is that he might not win the Republican Primary. Any other clown we elect as President in 2008, whether Democratic or Republican, will likely to continue business as usual. That means more saber rattling, more stupid wars on terrorism, waterboarding at your local Chuckee Cheese, printing more money, bailing out more hedge fund managers and banks, and further weakening our USD. Could 2008 be the year we say, "not worth a Greenback?"

    Real Estate will continue to spiral lower in 2008 as the next wave of ARM's will reset and add more foreclosure properties to the bulging house inventory we already have. I thought we might see a bottom at the end of this year but I'm leaning more to 2011 now. I'm still out there hunting for another investment property but the average Joe owner is still way too optimistic with his prices. Poor guy, he's going to get creamed in 2008.

    Gold. What can I say, I'm leaning really heavily to that shiny metal and I plan on trading the XAUUSD alot next year. We're sure to see it take out its old high and I'm willing to guess even $1000/oz by year's end, even sooner if we do something stupid like invade Iran or help fight a civil war in Pakistan.

    Stocks? I'm treading very lightly here but my guess is that the Fed will drop interest rates further, my target is down to 3%. When Ben is done cutting, I suspect we'll see more air in the stock market and higher gains. The markets will trend higher, possibly take out the old highs, and then stop like it did this year. I'm still heavily in cash and bonds and slowly working new money into the market. The question remains is, are we in a recession, entering one, or will the Fed just tell us to never mind that man behind the curtain? Only time will tell if I turned into a permabear or not.

    All my year end thoughts don't sound to optimistic because they aren't for the good ol' USA, but they are for other countries. The trick is figuring out how to make money and profit from stupid economic and political policies and I hope to continue doing that in 2008! Despite my ups and downs, this year, it was a great year for m! I was blessed with my second child, a happy family, good work, and had good investment returns. I was very fortunate this year and I hope that 2008 will be even better.

    Here's to wishing all my readers a great 2008! May you be fortunate and lucky in the coming new year. God Bless.

    PS: I plan on posting in the evenings starting in '08!