Wednesday 27 February 2013

Sterling, Silver

On Monday CU offered us a contrarian punt on Sterling, so here's a different view.  I don't much like the look of any of the major currencies right now, what with talk of competitive devaluation and every currency-bloc having its own compelling tale of woe. I took to billing in EUR again 6 months ago, which has served me well, but now I find myself unable to judge.  Is it all hopelessly relativistic ?  I am no macro-economist.

But there is always bullion to consider as a possible reference-point for paper money.  Readers will know I am a long-term holder of gold (strictly physical) which has been a one-way bet for several years now.  There have been some lurid commentaries on the precioussss just recently but I am unmoved: and quite by chance (Moody's having inexplicably failed to tip me off) I decided at the end of last week that we had reached a bottom.  So I went long silver, which I haven't held for ages now, and is by far the more volatile of the two traditional PMs: but I expect to be at my desk for a bit now, and able to watch the screen.

So if the post-Moody pound is to weaken against the dollar, I shall be even more glad of the decision.  Then again, CU may be right and Sterling may bounce, which would take some of the shine off it.  

As always, just MHO, DYODD etc etc.

ND

Update: and now there's this - 
"Sterling is winning the currency wars, having overtaken the yen as the world's worst-performing major currency this year, although economists suggested the pound's biggest falls could be behind it"

9 comments:

Blue Eyes said...

My personal view is that GBP will continue to be volatile. Our monetary policy is more transparent than most countries. So the exchange rate is more likely to react sharply to short term events such as Bank comments etc.. But it goes both ways, the GBP can still be a safe haven compared with the Euro.

I think the pound has a bit further to fall so that UK wages start to look good to international industrial investors (see the 1990s recovery for details) but my feel is that it won't collapse entirely.

Nick Drew said...

my feel is that it won't collapse entirely

I see you've been staying off the Budgie-feed, BE

very wise

andrew said...

BE: +1

The big mac index says that GBP is a little overvalued (~7%) wrt USD and undervalued (~10%) wrt EUR as at Jan 13.

On that, as GBP/USD = 1.51, you could see GBP/USD bouncing between 1.4 and 1.7.

We do have a v.v. long history of devaluation and large overseas holdings.

As most commodities (PMs) are priced in USD, in GBP terms it may be a good bet if you expect weakness, but I do have a natural bias towards things that are actually useful (Oil, Food, Mobile Phone manufacturers).

Budgie said...

ND said: "the pound's biggest falls could be behind it"

Not if Cameron and Osborne have their way.

Nick Drew said...

well, that was Telegraph actually (see the link) and I'm a pound-bear! (see rest of post ...)

Budgie said...

Sorry, ND, I was just using the quote as a handle. But I should have been more accurate.

Anonymous said...

I thought you paid VAT on physical silver? How are you buying ?

Nick Drew said...

bullionvault

but this isn't a recommendation or sales pitch, just an answer to your qn

Agence communication said...

"" But there is always bullion to consider as a possible reference-point for paper money. Readers will know I am a long-term holder of gold (strictly physical) which has been a one-way bet for several years now. There have been some lurid commentaries on the precioussss just recently but I am unmoved: and quite by chance (Moody's having inexplicably failed to tip me off) I decided at the end of last week that we had reached a bottom. So I went long silver, which I haven't held for ages now, and is by far the more volatile of the two traditional PMs: but I expect to be at my desk for a bit now, and able to watch the screen.""