Nassim Taleb on the illusion of stability of pegged currencies in Southeast Asia in 1997

[W]e are not sure that the world we live in is well charted.  We will see that the judgment derived from the analysis of these past attributes may on occasion mislead you and take you in the opposite direction.  Sometimes market data becomes a simple trap; it shows you the opposite of its nature, simply to get you to invest in the security or mismanage your risks.  Currencies that exhibit the largest historical stability, for example, are the most prone to crashes.  This was bitterly discovered in the summer of 1997 by investors who chose the safety of pegged currencies of Malaysia, Indonesia, and Thailand (they were pegged to the U.S. dollar in a manner to exhibit no volatility, until their sharp, sudden, and brutal devaluations.)

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, p. 102

Felix Zulauf on the coming currency reform due to repeated financial crises

We are in the final, in the end game, of this system.

It means that we will enter a deflationary period that is accelerating, and the policymakers are trying to counter-act and fight this by using highly inflationary policies. It's sort of a dance on a high-rope, a high-risk dance, and we don't know for certain which way the dancer will eventually fall down to-- some argue it's going to be a deflationary collapse and others argue that it will be hyperinflation.

I think the deflationary pressure on our system will increase and intensify over the next few years and we will come to the point where we will have Lehman, AIG, Citi, in one day happening. At that point in time, there is no way the banking system can handle it.

Therefore, next time, the governments can not come in again because many of those governments are already perceived as bust, too. At that point in time I think the central banks will come in big time and you will see that the balance sheets of the central banks will not expand by a factor of 2 or 3, but of 50, or 100, or something like that.

And once that happens, you will have virtually, in a few weeks, a situation where basically you make our currencies as we knew them, invaluable-- you destroy them.

~ Felix Zulauf, King World News, May 28th, 2010

Felix Zulauf on the gold bull market

The ongoing bull market in gold, which is really a bear market in all of the other currencies, will continue for a number of more years.

~ Felix Zulauf, King World News, May 28th, 2010

Felix Zulauf on gold as the ultimate currency

Big money investors have realized that they need to hide in a currency that has no liabilities and can not be created out of thin-air just by pushing a button or writing a note, or whatever, by central banks.

Gold, I see, not as a commodity but as the ultimate currency, a currency that can not be increased without working hard and getting it out of the ground.

~ Felix Zulauf, King World News, May 28th, 2010

Jim Rickards on similarities between Greece and the US, gold as an alternative currency

I'm having trouble finding a Greek metric where the US isn't as bad or worse, or will be shortly. You look at where our deficit-to-GDP ratio is, you look at where our debt-to-GDP ratio is going, money creation and other things-- we look a lot like Greece.

One big difference is that we can print our own money. But where does that get you? That's really the problem world-wide.

In every asset class, investors no longer think about the fundamentals, they think about government policy. In China, the question is, can the government prop up the housing market? In Europe, can the government prop up Greece? In the United States, can the government prop up the banks? We don't think about the fundamentals or balance sheets anymore.

[The US dollar and Treasuries] are the only place to go, but there are limits to that. The G-20 and the leaders may try to go to the IMF and SDRs to take the dollar off the hook, the market may go to gold on their own. So, it's kind of a race between SDRs and gold.

~Jim Rickards, senior managing director of market intelligence, Omnis Inc., CNBC Squawk Box, May 5th, 2010

Shopper from Ireland on the strong euro

Everything is half price for us.

~ Ashlee Clifford, 26, of Northern Ireland, shopping at a Circuit City Store in Manhattan, "Shoppers Hit Stores For Early-Bird Deals, But It's Just a Start," Investor's Business Daily, November 26, 2007

(Shoppers from overseas reveled as the dollar, at record lows vs. the euro, made discounts even deeper.)

Warren Buffett: Still bearish on the dollar

We still are negative on the dollar relative to most major currencies, so we bought stocks in companies that earn their money in other currencies.

~ Warren Buffett, 77, chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., October 25, 2007

Patricia Bundchen: Supermodel sister prefers to be paid in euros

Contracts starting now are more attractive in euros because we don't know what will happen to the dollar.

Patricia Bundchen, twin sister and manager of supermodel Gisele Bundchen, "Supermodel Bundchen Joins Hedge Funds Dumping Dollars," Bloomberg.com, November 5, 2007

Bill Gross: Bearish on the dollar

We've told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a non- dollar currency. That should be on top of the list.

~ Bill Gross, chief investment officer, Pacific Investment Management Co., "Supermodel Bundchen Joins Hedge Funds Dumping Dollars," Bloomberg.com, November 5, 2007

MarketWatch: Dollar likely to drop no matter what the Fed does

Just as no one is expecting an interest rate hike Wednesday, no one is betting on a sustained dollar rally this quarter, either. And just as bad economic or corporate headlines -- or even record-high crude oil prices -- rarely seem to derail stock market rallies these days, nothing the Fed delivers is likely to halt the greenback's slide.

Whether the Fed cuts its benchmark a quarter percentage point, as expected, or a half-point --or even not at all -- the dollar is likely to bear the near-term brunt of the market's kneejerk reaction either way, and then move in one direction: down.

~ MarketWatch, "Dollar likely to drop no matter what Fed does," October 30, 2007, by Lisa Twaronite

Dennis Gartman on the dollar

Everybody, everywhere is short the dollar in any sort of manifestation they can get their hands on... In 35 years of watching markets, I cannot recall a single trade that has been this one-sided. And when the public gets that one-sided, it usually ends in tears.

~ Dennis Gartman, The Gartman Letter, as interviewed on Bloomberg Video, November 1, 2007

Jim Rogers: Sell U.S. dollars, buy Chinese yuan

I'm in the process of -- I hope in the next few months -- getting all of my assets out of U.S. dollars. I'm that pessimistic about what's happening in the U.S.

It's the official policy of the central bank and the U.S. to debase the currency.

The U.S. dollar is and has been the world's reserve currency, the world's medium of exchange. That's in the process of changing. The pound sterling, which used to be the world's reserve currency, lost 80 percent of its value, top to bottom, as it went through the whole period of losing its status as the world's reserve currency.

[The Chinese renminbi is] the best currency to buy right now. I don't see how one can really lose on the renminbi in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple. [China is] going to be the most important country in the 21st century.

[The carry trades in yen and francs will] unwind someday, [which will send the currencies] straight up. I'm buying the yen.

[The bull markets in bonds and stocks are] over. Bonds will be a terrible place to be for many years and will in fact be going down for many years.

Jim Rogers, "Jim Rogers Shifts Assets Out of Dollar to Buy Chinese Currency," Bloomberg.com, October 23, 2007