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[eclectic]

.....are we holding local currency, a well-diversified mix of local and a stalwart currency like the US or Canadian dollar, or are we converting our pay in local cuurency each and every time we're paid into a reserve currency like the US $ or even British pound? Do we convert only when the xchange rate is favorable? How favorable should it be before it becomes dangerously favorable? For example, if the US $ falls to under 1,000 Korean won, or to under 2 ringgits, or to under 20 THB, would we still want to hold our wealth in US $s?

This is important as the IMF and World Bank as well as many central banks like China's, INdia's and Russia's, have all called for dropping the US $ THIS FALL 2010 as the world's reserve currency.

China will undoubtedly dump its dollar holdings which will utterly sink the greenback.

What are we, foreigners in our host countries and earning local currency--whether its ringgits, baht, rupees or rupiahs, etc.-- going to do about choosing a stable currency in which we can preserve our 'wealth' when this inevitably, and frighteningly-loomingly (as in "breathing down our necks right now"), hits the fan?

Any ideas? Is anybody looking into SDRs, that new concoction of a weighted average of several world fiat currencies? This seems to be the replacement currency for the US dollar. IN fact OPEC is already modeling futures contracts based on SDRs, and quite ready to implement the new pricing system for petroleum contracts.

[rayman]

Personally, I buy paper gold as a hedge. I prefer paper over the actual product due to the convenience in terms of (lack of) storage and liquidity. Gold producing and even exploration stocks are also another option depending on your appetite for risk.

[eclectic]

That is totally true. Good points. Right now most people are just totally oblivious to what is actually going on right under their noses. The US dollar is toast. It has lost very much value and not just in short term exchange rate terms. It has lost its value intrinsically. It is deflated.

14 trillion dollars have been printed out of thin air and flooded into the system worldwide. This was the too big to fail bailout. Its like a sugar high. YOu crank 5 bags of m&m's and you get the sugar rush. But 4 mins. later you get the SUGAR CRASH.

The dollar is utterly doomed, and American expats atleast, should decide shortly what damn currency they will hold their wealth in.

[spiral78]

The dollar is utterly doomed, and American expats atleast, should decide shortly what damn currency they will hold their wealth in.

Wealth? TEFLers? I think you are referring to other kinds of expats....

[eclectic]

[veiledsentiments]

[johnslat]

Dear eclectic,

OMG - I hope the local supermarket will accept gold.

There are, however, some dissenting opinions:

US Dollar Outlook for 2010 2011: Euro, Yen, Aussie and Loonie Fall in Flight To Greenback Safety
"Dollar Heads for Biggest Quarterly Gain In Three Years. The world still sees the dollar as the safety currency in the globe as demonstrated by it�s recent strength against the Euro and Yen. European leaders� are struggling to forge a plan to bail out Greece and the yen fell against all 16 of its most-traded counterparts this week as Japanese consumer prices dropped for a 12th month, increasing the chances the nation�s central bank will lag behind its peers in raising interest rates. Relatively, the US economy is still showing signs of growth, improving corporate profits and a slow down in unemployment. Company earnings increased 8 percent in the fourth quarter, capping the biggest year-over-year gain in 25 years, figures from the Commerce Department showed. The US economy expanded at a 5.6 percent annual rate."

http://www.savingtoinvest.com/2008/05/us-dollar-outlook-2008-2009-and-beyond.html

"Dollar�s death � even dollar doubts � are exaggerated
The greenback�s resilience has been questioned at least three times in the post-war era � in the 1960s as gold reserves ran short, amid Japan�s rise in the 1980s, and upon the founding of the euro in the 1990s. Yet, the dollar has always rebounded in a reflection of US economic prowess, unrivalled liquidity and stability of US financial markets, scale benefits of the dollar in global transactions, and sheer path-dependence. A tipping point has not occurred due to the lack of alternatives and need. Alternatives continue to be tenuous.
The dollar�s prominence is as indisputable as is US safe haven status.17 But the literature agrees that global reserves will need to grow robustly to keep up with import demand.18 This accentuates the Triffin Dilemma. The soaring US debt risks undermining the dollar and America�s enjoyment of its hard-earned exorbitant privilege, jeopardising US global economies.19
Whether pariah America or safe haven America will result depends on policy. Size, growth, liquidity, and solvency require fiscal discipline, non-inflationary policies, and capital investments. Yet solvency and central bank independence are not sufficient. If the US private sector deleverages and other countries accumulate dollar-denominated assets as reserves, the US government would re-emerge as the borrower of last resort (Wolf 2009, Posen 2008).20 The G20 drive to contain global financial imbalances is a means to avert such an outcome."

http://www.voxeu.org/index.php?q=node/5283

Of course, you can also find others who predict imminent collapse. So, it's a crap-shoot. But I think I'll hold off on converting my very little wealth into gold bars (a percentage of a gold bar would actually be more appropriate.)

Regards,
John

[eclectic]

screw gold bars. I said "nuts", as in food shortages.

[007]

MOD EDIT

According to my 7th sense, one day the Americans will wake up to find that all the banks are on "bank holiday"!

Bye-bye the Dollar!

[scot47]

Keep your savings in gold bullion like me, secretly buried at a location near the River Danube. So secret that even I have forgotten where it is.

[geaaronson]

Scot 47

PM me and I will remind you where you buried them. Ooops, how stupid of me. They`re in my house now and I`m not telling.

[geaaronson]

It has lost its value intrinsically. It is deflated.

Money has no intrinsic value. This statement has no possible veracity.

[geaaronson]

The Death of God and the American Dollar have been both greatly overstated.

[scot47]

You mean He is only partly dead and the US$ has only partly collapsed.

These are the End Times, I am sure of that.

[stillnosheep]

It is always the End Times