Forex Diversification

[perfect_simulation]

of 25% cash, I am considering keeping 5% in different currencies. I couldn't find any HB thoughts on this, he advocated the dollar because of its reserve status. The Euro is considered to be the 2nd reserve currency, and you can pick up shares of FXE to get Euro exposure. And maybe some FXC for Canada.

Any thoughts?

[Mark Leavy]

Your 25% gold represents an amalgam of world currencies. Not exactly, but that is how it reacts in the short term against the dollar.

[Hal]

HB touched upon that briefly in his radio show. He stated if there was high inflation in the USD, funds would move into Gold, which is a much smaller market, and would more than offset the losses.

He also advised an Indian caller that if the economy went bust in India, the Indian PP holder would still have his Gold. The way it was said implied Gold would not cover the losses as it would in the USA.

So..., if you are a non-US resident and wish to diversify currencies, I would suggest doing that with the USD.
Have a read of some of Smithy's posts. He lives in Canada and faced the same issues.

Or you could join "The Sect of Smith" and implement the GoldSmith portfolio

[Smith1776]

Or you could join "The Sect of Smith" and implement the GoldSmith portfolio

[Vil]

of 25% cash, I am considering keeping 5% in different currencies.
...
Any thoughts?

Not really sure those 5% would make any notable difference (unless you decide to diversify with Zimbabwean dollars ..). Personally, I am keeping 2:1 as ratio of EUR:USD holdings (EUR being my native currency). While someone can say that's a pretty active bet, what is not (even going on with PP is a sort of)?
Regarding Gold serving as a basket of world currencies, I am not truly convinced it is, for me it looks more of anti-USD than anything else.. although China and Russia are consistently buying gold over the past years as they look to diversify away from the USD/treasuries. Regarding the size - haven't seen any new figures lately, but a year ago the aggregated Gold market was valuated for slightly less than $10tn (measured by spot prices back then).

[doremoreguy]

Keeping some exposure to the Euro (through something like FXE) and Canadian Dollar (via FXC) makes sense, given their roles in the global market. The dollar still holds strong as a reserve currency, but having a bit of variety can help balance things out.
If you're actively trading while doing this, you might want to look into a Fast Track Trading Discount Code. It's helped me cut down on fees, which is always nice when you're trying out different strategies.

[ochotona]

I just sold my short-term corporate bonds, which I considered to be "nearly cash", and bought FXF the Swiss Franc ETF. I didn't want to hold the currencies of jurisdictions that have economically weak nations in them (many Euro States, also UK) or have unique exposure to "geopolitical risk" (NATO States, Canada).

Question... HOW FAR WILL THEY LET TTHE US DOLLAR SLIDE? 90? 80? In 2008 it touched 71 !