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If the USD is Falling Do We Need a Shelter? |
The USD is in a free fall currently as the Fed continues its campaign of quantitative easing. For an article on what that strategy means and how it could affect you, click here. The previous run up in the USD was probably the result of investors seeking safety and a shelter against the risks of the global financial crisis. But with the USD falling, does that mean that a shelter is not needed?
 I think the answer is that as long as the crisis is in play, a shelter is needed. That shelter may shift from one asset to another but it will still be required and the trends could be very large. I think the bubble or shelter is likely to shift to the CHF and that appears to be already happening. From a macro perspective they are no worse off than the European or North American economies and they are a traditional source of safe capital investment.
A move into the CHF was seen the last time uncertainty started to ramp up in the world economies in 2000-2003. As investors seek less risky assets demand for the CHF is likely to continue increasing. I suspect that the USD/CHF is likely to remain extremely volatile and therefore CHF crosses may be a less risky trade. In the video, I will take a look at this situation and run through the alternatives.
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