The benefits of a weak U.S. Dollar
The price of commodities related to the value of the dollar and interest rates tends to follow the following cycle:
Interest Rates are Cut → U.S. Dollar is Pulled Lower → Gold and Commodity Index Bottom→ Interest Rates Turn Up → Bonds Peak —> Stocks Peak → Dollar Rises → Gold and Commodity Index Peak → Interest Rates Peak →Bonds Bottom → Stocks Bottom → Interest Rates are Cut→ Cycle Begins Again
The Caveat
At times, however, this cycle does not persist and commodity prices do not bottom as interest rates fall and the U.S. dollar depreciates. Such a divergence from this cycle occurred during 2007 and 2008, as the direct relationship between economic weakness and weak commodity prices reversed. During the first five months of 2008, the price of crude oil was up 20%, the commodity index was up 18%, the metals index was up 24% and the food price index was up 18%, while the dollar depreciated 6%. The euro/dollar exchange rate, which fluctuated around 10% from 1999 to 2004, rose to a striking 52% during the first half of 2008. That means that the one could buy $3 for 2 Euros in instead of $1 for 1 Euro. The U.S. Dollar will most likely remain weak during 2014 and this will incentive foreign investor to invest in U.S. assets.
Foreign Investment
One can profit from a falling dollar by investing in foreign companies or U.S. companies that derive the majority of their revenues from outside the U.S.
Strong foreign currencies provide incentive to buy real estate and other tangible assets in the U.S. since they are extremely inexpensive during periods of falling dollar. Because foreign currencies can buy more assets than the comparable U.S. dollar can buy in the U.S., foreigners have purchasing power advantage.
Hello, I think your site might be having browser compatibility issues.
When I look at your blog site in Chrome, it looks fine but when opening
in Internet Explorer, it has some overlapping. I just wanted to give
you a quick heads up! Other then that, very good blog!
Bridges can be as simple as laying a large flat stone or wooden planks over
a trench. If you invest some time, you will be able to find various companies that manufacture good quality wireless speakers such as Fenda Audio.
However, the lesson from his parents ‘that hard work will always pay off’ was a consistent concept
in his life.