Merk G10 Currencies Monetary Score

Merk Funds has recently released a white paper entitled "G10 Currencies: A Monetary Policy Analysis" where they analyzed G10 currencies and gave a "Merk Monetary Score" to each of those.

The Merk Fiscal Score and a Merk Economic Score are aggregated together with the The Merk Monetary Score into an overall Merk Currency Score

In this 7-page white paper, they explains their methodology and the Merk Monetary Policy Score eventually ranks monetary zones as follows:

1. Australia
2. Canada
3. New Zealand
4. U.S.
5. Sweden
6. Euro Area
7. Norway
8. Japan
9. UK
10. Switzerland

The best currencies in terms of monetary policy would then be the Australian dollar and the Canadian dollar and the  worst currencies the British pound and the Swiss franc.

John Williams: US Deficit Is Really 5 Trillions US Not 1.3

VisionVictory interviewed John Williams of Shadow Stats. 

Mr. Williams explains that if the government used Generally Accepted Accounting Principles (GAAP) like corporations do, the US deficit would actually be close to 5 trillions instead of the announced 1.3 trillions for 2011. This number includes NPV of unfunded liabilities. That's a deficit corresponding to a whooping 30% of GDP...

He also says that the loss of confidence in the US dollar has already started, you don't want to be in the US dollar and buy precious metals (Gold, Silver) or strong currencies such as the Canadian Dollar, Australian Dollar and Swiss Franc. 

Finally, he recommended people to store food, as when (not if) the financial system and the US dollar collapses there should be supply disruptions. 

Jim Rogers: Buy the Euro and the Swiss Franc in 2012

Apparently, despite all the talks about a currency crisis in Europe, I'm not the only one to think the Euro may be a buy in 2012, as Jim Rogers was interviewed on CNBC on the 3rd of January 2012 saying he would consider investing in the European currency along with the Swiss Franc. The main reasons he wants to invest in the Euro are the large short position in the Euro and the fact that it is an election year in France, so they will probably do something (spend money or monetize the debt) to make the market feel better for a while. However, he believes this would be a terrible mistake and we'll have to pay the price in 2013-2014.
I'm also worried about the Japanese Yen, as in the last few month they had a trade deficit. If this persists, it would be negative for the Yen. I suppose Jim Rogers plans to convert some of his Japanese Yen holdings into Euro and CHF.

Five Favorites Currencies by Peter Schiff and Axel Merck

Peter Schiff of Euro Pacific and Axel Merk of Merk Investments have just release a new report about entitled: "Peter Schiff’s & Axel Merk’s Five Favorite Currencies for the Next Five Years"

The first 4 currencies they select is based on different geographical zones:

• The Anglosphere: Australian Dollar (Peter Schiff) & New Zealand Dollar (Axel Merk)
  
• The Nordic Bloc: Norwegian Krona (Peter Schfiff) & Swedish Krona (Axel Merk)
  
• Continental Europe: Euro (Axel Merk) & Swiss Franc (Peter Schiff)
  
• East Asia: Singapore Dollar (Pete Schiff) & Chinese RMB (Axel Merk)
  

The last choice is their wild card:

• Canadian Dollar for Axel Merk
• Chinese Renminbi for Peter Schiff

If you want to know the reasons behind their choices you can download the full 23-page report at http://www.newcurrencyreport.com/

Jim Rogers: The US Dollar is not a Safe haven

Interview with Jim Rogers on CNBC on the 22nd of September 2011.

He said right now he would just hold USD, CHF (Swiss Franc) or Agriculture, although he does not consider the US dollar to be a safe haven in the long term.

Jim Rogers: The Chinese yuan is the next safe haven currency.

Jim Rogers was interviewed on CNBC on Wednesday 7th September 2011 to discuss the recent move by the SNB (Swiss National Bank). Here are his views on the move and the Chinese yuan:

"The Swiss central bank's decision to set a limit on how much the Swiss franc can appreciate against the euro is "a huge mistake". The move will work for a while, but the market will have more money in the end than the SNB which risks losing a lot of money buying up lots of foreign currencies which they will eventually sell at a loss. Another risk is that the central bank will totally debase the Swiss franc trying to keep Switzerland 'competitive' which will then destroy the traditional Swiss financial industry. So this is a huge mistake for Switzerland since they are going to suffer more either way"

"RMB is best, the US dollar is probably good in the short term, but the absolute worst over the long term. There are various ways to get RMB exposure outside China, investors can now open bank accounts in renminbi in various cities like New York, San Francisco, Hong Kong, Singapore and others and can buy renminbi-denominated bonds in the international markets."

CHF is now effectively pegged to Euro at 1.20

In a dramatic move, the SNB has decided to put a floor on the price of the CHF vs Euro, a floor at 1.20 CHF per Euro. This is a defacto peg to the Euro as the Swiss franc is unlikely to decline and this resulted in a massive 8% move in the Swiss Franc / Euro exchange rate a massive move (probably unheard of) in the currency markets. (See chart below. Source: Yahoo Finance)


Another battle has been fought in the currency war and the Swiss Franc is no longer a safe heaven. There remains the Yen (but I wonder why) and possibly the Singapore dollar (SGD) which appreciated around 6% against the USD since the beginning of the year. Of course, there is still gold and silver which should remain the real safe heavens.