In the last year, there have been many currencies that lost a significant amount of value:
- The Russian ruble has lost 34%
- Argentine Peso lost 24%
- The Norwegian Krone and Swedish Krona both lost 14%
- The European Euro lost 13%
- The currencies of Japan, Israel, Poland, and Czech Republic have all lost 10%
- Even the Canadian dollar lost 9%
In each of these examples, natives in these countries and currency holders would have been better off by holding their money in any other stronger currency; even gold made a small profit against nearly all currencies.
Since currency prices tend to move in a trend (it takes time to reverse structural forces or central bank policies), once a currency begins a move over 5%, in my experience, it tends to continue in that direction. What to do when your home currency is at risk for falling more than 5% to any of the major currencies? It is time to consider moving some of your money into a stronger currency.
It has never been easier to move some of your money into other currencies:
- Through most brokerage accounts you can use exchange trades funds or currency funds.
- Everbank offers certificates of deposit denominated in several currencies or baskets.
- European and Asian banks commonly offer multi-currency accounts.
- Some multi-currency accounts also permit holding ounces or grams of gold.
- Buying the stock of a company whose predominant sales is in the currency of your choice.
- Note that the worst exchange rates continue to be at airports and train stations.
- Bitcoin can move up and down +10% in a single day, so it is not a stable location of value.
Your home currency is very important – whether it is facing a 10%-50% loss of value, goods are going to be increasing in price. If you have no currency hedge then you will incur the full loss of your money; while those that have held some stronger currency will have more financial options.