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by
Chris Martenson
The Slow Money movement focuses on deploying capital, locally, to strengthen small food enterprises. Its goal is to improve the quality, dependability and sustainability of our food source, while financially nurturing communities and delivering an attractive return on investment to native investors.
Woody Tasch is the founder and chairman of Slow Money – in this week's podcast, he and Chris discuss the templates his organization is piloting across over 350 ventures in local food production, processing, distribution and marketing.
Woody Tasch: Slow Money
by Chris MartensonThe Slow Money movement focuses on deploying capital, locally, to strengthen small food enterprises. Its goal is to improve the quality, dependability and sustainability of our food source, while financially nurturing communities and delivering an attractive return on investment to native investors.
Woody Tasch is the founder and chairman of Slow Money – in this week's podcast, he and Chris discuss the templates his organization is piloting across over 350 ventures in local food production, processing, distribution and marketing.
by
charleshughsmith
Executive Summary
- The critical role of interest rates and carry trades
- How capital flows across borders
- The growth in supply of dollars is slowing
- The rationale for the dollar strengthening from here by 50-100%
If you have not yet read Is Part 1: The Dollar May Remain Strong For Longer Than We Think available free to all readers, please click here to read it first.
In Part 1, we reviewed the key concepts that drive supply/demand (and thus the price/relative value) of the U.S. dollar. In Part 2, we’ll cover the dynamics that could push the value of the USD vis-à-vis other currencies much higher in the years ahead.
Interest Rates, Bonds and Carry Trades
To understand the price of any currency—measured in other currencies, gold, oil, etc.—we look at a currency as a special kind of commodity, one that greases transactional trade of goods and services and also serves as a store of value. Like any commodity, its price relative to other commodities is determined by supply and demand.
If demand is strong and supply is tight, the value will increase. This is the same for dollars, gold, oil, grain, bat guano, etc. The reverse is equally true: if demand slackens and supply balloons, the value will decline.
To understand the supply and demand for currencies, we need to understand the role of interest rates, sovereign bonds and carry trades.
The connection between interest rates and demand is self-explanatory: if interest rates paid at home are near-zero, and another nation’s bonds are paying a higher yield, it makes sense to sell (or borrow) one’s own currency and buy a bond denominated in another currency.
This is the foundation of currency carry trades. PP.com’s own Davefairtex recently offered an excellent explanation of how carry trades work on the Gold & Silver Group forum:
I believe that QE causes inflation in other countries by dropping rates to 0% which encourages carry trades, whereby traders borrow USD for extremely low rates here in the US, and then send it overseas to find a yield. Cheap money in the US causes money to flow elsewhere, where rates are higher.
Carry Trade For Dummies:
Step 1) Borrow $1 billion US at LIBOR-1M rate; cost 0.16%.
Step 2) Trade $1 billion US for 1.075 billion AUD.
Step 3) Buy 1.075 billion 2-year AUD govt bonds; yield 2.52%
Step 4) Collect $23 million USD/year for doing no work at all.
Carry trades work in both directions for the dollar…
Why the Dollar Could Strengthen – A Lot – From Here
PREVIEW by charleshughsmithExecutive Summary
- The critical role of interest rates and carry trades
- How capital flows across borders
- The growth in supply of dollars is slowing
- The rationale for the dollar strengthening from here by 50-100%
If you have not yet read Is Part 1: The Dollar May Remain Strong For Longer Than We Think available free to all readers, please click here to read it first.
In Part 1, we reviewed the key concepts that drive supply/demand (and thus the price/relative value) of the U.S. dollar. In Part 2, we’ll cover the dynamics that could push the value of the USD vis-à-vis other currencies much higher in the years ahead.
Interest Rates, Bonds and Carry Trades
To understand the price of any currency—measured in other currencies, gold, oil, etc.—we look at a currency as a special kind of commodity, one that greases transactional trade of goods and services and also serves as a store of value. Like any commodity, its price relative to other commodities is determined by supply and demand.
If demand is strong and supply is tight, the value will increase. This is the same for dollars, gold, oil, grain, bat guano, etc. The reverse is equally true: if demand slackens and supply balloons, the value will decline.
To understand the supply and demand for currencies, we need to understand the role of interest rates, sovereign bonds and carry trades.
The connection between interest rates and demand is self-explanatory: if interest rates paid at home are near-zero, and another nation’s bonds are paying a higher yield, it makes sense to sell (or borrow) one’s own currency and buy a bond denominated in another currency.
This is the foundation of currency carry trades. PP.com’s own Davefairtex recently offered an excellent explanation of how carry trades work on the Gold & Silver Group forum:
I believe that QE causes inflation in other countries by dropping rates to 0% which encourages carry trades, whereby traders borrow USD for extremely low rates here in the US, and then send it overseas to find a yield. Cheap money in the US causes money to flow elsewhere, where rates are higher.
Carry Trade For Dummies:
Step 1) Borrow $1 billion US at LIBOR-1M rate; cost 0.16%.
Step 2) Trade $1 billion US for 1.075 billion AUD.
Step 3) Buy 1.075 billion 2-year AUD govt bonds; yield 2.52%
Step 4) Collect $23 million USD/year for doing no work at all.
Carry trades work in both directions for the dollar…
by
Adam Taggart
This week’s podcast build on our recent report on hedging, driller deeper into how the technique can be used to offer protection against falling asset prices.
There are numerous ways to hedge, which vary in cost and complexity — with several being quite simple and low-cost (such as building cash or employing stops). But many investors don’t practice them, mostly out of unfamiliarity. Which is a shame, as often a small degree of defensive planning can provide substantial avoidance of large losses. (In fact, our recent poll has discovered that one of the most common and cheapest methods of hedging — setting stops — is hardly used by PeakProsperity’s readership.)
New Harbor: Hedging 101
by Adam TaggartThis week’s podcast build on our recent report on hedging, driller deeper into how the technique can be used to offer protection against falling asset prices.
There are numerous ways to hedge, which vary in cost and complexity — with several being quite simple and low-cost (such as building cash or employing stops). But many investors don’t practice them, mostly out of unfamiliarity. Which is a shame, as often a small degree of defensive planning can provide substantial avoidance of large losses. (In fact, our recent poll has discovered that one of the most common and cheapest methods of hedging — setting stops — is hardly used by PeakProsperity’s readership.)
by
Adam Taggart
by
Adam Taggart
Executive Summary
- What you need to know about hedging with
- Stops
- Inverse and leveraged ETFs
- Shorts
- Options
- Futures
- Deciding which hedging instruments are appropriate for your portfolio
If you have not yet read Part 1: Defying Gravity available free to all readers, please click here to read it first.
OK – hedging sounds prudent. But how do you do it?
Our focus here in Part 2 of this report is to cover the most common vehicles used in hedging strategies. Each one merits its own dedicated report (a series we’ll likely create in the future) to truly understand how and when to best deploy, so this report will focus on providing you with a good introduction to each, with guidance on how to further explore the ones that strike you as appropriate for your needs and personal risk tolerance.
Before continuing further though, let me make a few things absolutely clear. This is NOT personal financial advice. This material is for educational purposes only, and as an aid for you to discuss these options more intelligently with your professional financial adviser(s) before taking any action. (If you do not have a financial adviser or do not feel comfortable with your current adviser’s expertise with these hedging vehicles, we’ll be happy to refer you to our endorsed adviser)
Suffice it to say, everything discussed in this report (even the % cash component mentioned in Part 1) should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good…
How to Hedge Against A Market Correction
PREVIEW by Adam TaggartExecutive Summary
- What you need to know about hedging with
- Stops
- Inverse and leveraged ETFs
- Shorts
- Options
- Futures
- Deciding which hedging instruments are appropriate for your portfolio
If you have not yet read Part 1: Defying Gravity available free to all readers, please click here to read it first.
OK – hedging sounds prudent. But how do you do it?
Our focus here in Part 2 of this report is to cover the most common vehicles used in hedging strategies. Each one merits its own dedicated report (a series we’ll likely create in the future) to truly understand how and when to best deploy, so this report will focus on providing you with a good introduction to each, with guidance on how to further explore the ones that strike you as appropriate for your needs and personal risk tolerance.
Before continuing further though, let me make a few things absolutely clear. This is NOT personal financial advice. This material is for educational purposes only, and as an aid for you to discuss these options more intelligently with your professional financial adviser(s) before taking any action. (If you do not have a financial adviser or do not feel comfortable with your current adviser’s expertise with these hedging vehicles, we’ll be happy to refer you to our endorsed adviser)
Suffice it to say, everything discussed in this report (even the % cash component mentioned in Part 1) should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good…
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