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A few weeks ago, I transferred one of my IRA accounts to Interactive Brokers. That account is now loaded with Spock Rocks. Most of those positions are Canadian miners. They are priced in Canadian dollars.
Now … if the dollar strengthens, as it did today, then the U.S. dollar value of my positions (priced in Canadian dollars) goes down. (The total portfolio has lost $U.S. 3600 today just because of the currency exchange.) But the value of the miners has gone up. And that gain is reduced by the currency issue.
The Gold Bull camp is betting (I would imagine) that the U.S. dollar will go down. But will that be the case after Brexit? What’s the future of the Euro (doesn’t it make up the biggest position in the USD index?).
If the dollar weakens, then I’ll enjoy a positive gain, just from the exchange rate.
I throw this out there for other U.S. citizens thinking about an IB account.
Any thoughts on this dilemma?
I can sympathize with all observations made here being in the USD however I am not too worried.
(rhetorically) – What will be the reaction of the Yuan to this sudden spike in the dollar? – DEVALUATION – notice that right before the last Fed meeting the Yuan spiked down, then no rate raise (despite all the bluster) and the Yuan immediately popped right back up – then Jack Lew ‘warned’ China of manipulating their Yuan in retaliation to a prospective Fed rate hike – an truely toothless threat to be sure – this has been a repeated pattern ever since the Dec rate hike. BTW, a sudden devaluation of the Yuan is what roughtly correlated with the recent dips in the US stock markets.
A rising dollar will kill US markets (earnings are already weak and mkt P/E’s stretched), so either in the next few days/weeks the dollar is going to fall back to pre-brexit levels and we will then realize our gain in Canadian PM’s and US markets can breath a bit easier OR (and this is what I think will happen) the USD will remain high or possibly go higher and the last mkt standing S&P500 will crater or slowly decline into a crecendo crash in response to a coming devaluing of the Yuan – in either case I see bullishness for the PM safety trade (part will go to cash other will go to PM’s so dollar and PM’s may rise together for a period). In either scenario with Brexit IMO the genie is out of the bottle and CB’s are going to get desperate to control markets and will again fail.
Sit Tight and get some popcorn, the $#!T show is just beginning.
swings and roundabouts. its the stocks. not the cross rates that really matter.