Invest in the Right Currencies

Or Lose Money

Last week I suggested that investing in real estate in The West was not a good idea. That amounts to investing in the country, and if the country is broke and the currency is tanking, investing in that same country is idiotic.

The US $ has lost 96% of its value over the past 100 years. That is supposedly inflation adjusted.

Let’s put things slightly differently. Suppose you have $100,000. What would happen to that value over the course of a decade if invested in a failing currency?

The US trade weighted index is made up of the euro, yen, sterling, and canadian $. All of which have lost value over the past decade. So dont invest in them. If the dollar is sinking against other currencies that are falling, what does that say about the dollar?

Let’s say you are invested in something bringing you in 10% p.a. If your currency is losing that or more every year, you are not making any money.

During the first half of 2024 the US $ lost 11% against other failing currencies. That could average out at 20% against a strong currency in a year, or indeed, maybe a lot worse.

If you are invested in the US currency, you are investing to lose. Put another way, you are going bust!

And dont buy land. Invest where the currency is strong!

And that takes me back to the narrative that investing in land is a good idea.

Last week I read an absurd piece of investment advice which claimed that buying real estate was a great idea.

I’ve lost count of how many times I have written this, but here it is again. No-one listens, but I’ve been saying this for over fifty years, and I have yet to be proved wrong.

It doesn’t matter if the population is increasing. That doesn’t drive house prices. Look across at most US cities. Poor people live in cheap housing. What’s the cheapest housing? Tent city on the streets, preferably under a bridge. I do know how the underclass lives. Once long ago I briefly shared that lifestyle. Yes, I used to live under a bridge in Paris during the summer of 1968.

It also doesn’t matter how many houses are being built, or rather, what the housing shortage is. There is the same housing shortage during a crash as there was during the good times.

There is only one metric that counts when you are looking at housing prices, and that is the availability of money.

I’m probably wasting my time, but I’ll say it again, with the caps-lock on:

THERE IS ONLY ONE METRIC THAT COUNTS WHEN YOU ARE LOOKING AT HOUSING PRICES, AND THAT IS THE AVAILABILITY OF MONEY!!

If money is easily available, people will go out and buy. If it is not, no matter what they want, they wont be able to afford whatever it is. That means prices will either stagnate or sag.

Look around you, what do you see?

1 Banks are not lending. In fact, it is worse than that. Banks are going bust.

2 Governments are going bust, so they are cutting welfare.

3 Governments are having to raise interest rates to attract buyers for their bonds. People dont go out and borrow when borrowing costs are going up, or will have to go up shortly. If they dont go up, governments will resort to money printing, which will trash the currency. What does that mean? It means that everything starts to cost more, so money is buying less, so the last thing you want under those circumstances is to be borrowing money. So only the reckless will be buying real estate.

4 Borrowing money in the bond market is yesterday’s game. Tomorrow’s game is money printing and currency collapse. That is a heads-you-lose scenario against a tails-you-lose scenario. Dont go into debt! A mortgage is a debt, and the level of interest charged is out of your control.

5 Which currencies are backed either by gold, industrial output or commodities? Europe is not covered by any of those.

6 And who is that stranger in the room who is using a new shared trading system?

185 countries on the planet have signed up to the new BRICS trading system. About the only ones who haven’t are in the Western Alliance.

Now put that knowledge against the knowledge that the countries selling energy, agricultural products, and general commodities are part of the 185 countries, while the G7 countries are the ones who desperately need to buy this stuff, while at the time they are the ones with failing currencies.

What can I say? If you cant see where this is going you need to get a better pair of specs.

I think I’ve said this before. 2026 is shaping up to be a real bitch of a year.