Peso up to 4.13 - Collapse Finally Here?

[davonz]

Take a look at other commodity based economies.. NZ and AU dollars took a hit last week too.. NZ$ went from US$0.81 to around US$0.78 in a day or 2, and AU$ went from US$1.10 to US$1.07.. so its not a crash of the peso... The NZ$ has recovered somewhat to US$0.79 (first major traded currency to open), but i see the peso hasnt come up yet, but its wont be traded much until tomorrow due to the weekend..

 

[gouchobob]

I think people may be missing the point. Last week commodity prices crashed, we will have to see if this actually the bursting of the bubble, it looks like it but things like this can only be judged from after the event. If it is a burst bubble then indeed Argentina has a big problem along with Brazil and other commodity producers. The problem is magnified in Argentina as all the additional revenues brought during the boom went straight to additional government spending. If commodity prices fall and stay down then the government has two choices, one cut government spending drastically, two quickly run out of money and crash. Either choice obviously has problems. We will see in the coming months if this was a commodity crash or just a brief correction. It shows how dangerous it is to invest in things like silver, down 30% for the week. Regardless the commodity boom will end at some point, just keep an eye on Asian and China in particular, events there will be the determine the fate of commodities for the time being. If commodities do continue to tank then this is a deflationary event. If the threat of inflation actually turns into deflation then why would anybody want to hold gold, especially at these prices, gold would be the next commodity to tank big time in my opinion.

 

[dennisr]

The € tomorrow shall be something to watch I would think. Short the € (EUO). Wish I could find a way to short the AR peso. Money in the bank. About the only thing I am sure of.

 

[igor]

If it is a burst bubble then indeed Argentina has a big problem along with Brazil and other commodity producers.

gouchobob,

I guess before commodity prices have dropped, they were about to drop and Argentina was doomed anyway?

Here are a few charts for you

http://www.ccstrade.com/futures/grains/historical/

Can you identify a single point within last 40 years time where Argentina was doing relatively OK according to your opinion?

 

[tanvimil]

There is no commodity bubble. This is not rocket science. When they print money out of thin air, inflation happens. And that is what we are seeing.

Also, silver had a huge correction. Although it's only back to the level 60 days ago:

Long term, silver and other commodities are heading up due to world wide inflation.

 

[gouchobob]

gouchobob,

I guess before commodity prices have dropped, they were about to drop and Argentina was doomed anyway?

Here are a few charts for you

http://www.ccstrade.com/futures/grains/historical/

Can you identify a single point within last 40 years time where Argentina was doing relatively OK according to your opinion?

I wasn't in Argentina 40 years ago so I can't comment directly but Argentina certainly has suffered from declining fortunes for the last 100 years. If Argentina had done something like Chile creating a stabilization fund(i.e. socked money away when prices are high to carry them in period when prices are low) then I would have more confidence. Its not Argentina's fault that prices fluctuate, its only their fault to not realize they do. You would have to agree that the current policies of the government will almost without doubt have to end in severe problems at some point.

 

[gouchobob]

There is no commodity bubble. This is not rocket science. When they print money out of thin air, inflation happens. And that is what we are seeing.

Also, silver had a huge correction. Although it's only back to the level 60 days ago:

Long term, silver and other commodities are heading up due to world wide inflation.

You can remind me of your graph in the future if you are correct. I will
happily point to yours if you are wrong. We need a few more weeks of results to see who is correct. There are many people who hope you are right. My advice is don't get sucked into economic positions based on your political beliefs (mainly anti-Western and particularly anti-American) as some here seem to have. Some here seem to let their political beliefs guide their investment decisions(mostly hot air in my opinion) and are a very grave danger to their own personal and other peoples finances for those that choose to listen.

 

[Joe]

Almost all the commodity currencies, e.g. Aussie, Loonie, Real, etc. have risen significantly against the US dollar over the past several years.

It takes a special level of incompetence to have a commodity currency and lose value to the US dollar.

 

[gouchobob]

Almost all the commodity currencies, e.g. Aussie, Loonie, Real, etc. have risen significantly against the US dollar over the past several years.

It takes a special level of incompetence to have a commodity currency and lose value to the US dollar.

But in fact they all did fall in the last week. If commodity prices continue to fall then all of these currencies will keep falling against the dollar.

 

[Joe]

But in fact they all did in the last week. If commodity prices continue to fall then all of these currencies will keep falling against the dollar.

The Aussie dollar is coming off an all time high and is still, even after last week's losses, much higher than it ever was in the entire history of Australia... Currencies fluctuate wildly in the short term and weekly movements are not of great concern.

In any case, the chart of US dollar to Argentine peso is completely different than the chart of US dollar to Australian dollar (when taken over the last year or years).