The Only Place Safe Haven? The US DOLLAR???
Yes, believe it or not the US dollar is approaching three year highs against many of the major currencies such as Yen,Euro and British Pound…so much for Rapper singers and models that last year refused to be paid in US dollars. Earlier last year many flocked to the safety to the Japanese Yen and Swiss Franc.
Investors see the rest of the world collapsing, and the yen & SF franc are no longer a safe haven.The Swiss franc has suffered from a weakening Swiss financial system and threats of intervention by the central bank to push the currency lower against the euro. More so one needs to be aware the obligations of the top three Swiss banks have debts greater than 8X the GDP of Switzerland. Can Switzerland be the next Iceland? If so..can you imagine the dominoes that can fall. The major banks in Switzerland were involved in all types of CDO, CLOs,MBS as well as illiquid loans to Eastern Europe. Just UBS has lost 50 Billion so far.
The yen has suffered as carry trades finished unwinding.Japanג€™s crumbling economy. Even Japanג€™s vehicle production has had the worst decline in 42 Years.
There are no alternatives to the dollar right now as far as safety other than Gold possibly. Those who were so impressed with Gold surpassing $1,000 last week were stung with an approx 5% pullback. The fact is that nothing is really safe. One needs to be aware of what is strong…and what is weak. It is very hard to be a buy and hold investor today. One can not simply buy Gold or Euros…or even US Dollars. All is in such flux not seen in times before. Logic tells us in the longer term, the vast external liabilities of the U.S. economy argue for a weaker dollar. Possibly the US dollar could devalue as it did in the Great Depression of 1929 which would wipe the debts the US owes to China, Japan and the Middle East oil producers.