Don't Need to Cry for Argentina
May 20, 2008
It is springtime in Iola. It is colder than normal, but it still is spring after a rough winter. Life always looks better as nature greens things up.
It may be springtime for the U.S. dollar, too. It had a rough winter. Like Rodney Dangerfield, it got no respect, but now perhaps things are changing and the world may be returning to the traditional verities.
I read yesterday that middle class people in Argentina are rushing to convert their pesos into – you guessed it - U.S. dollars. They fear the wheels are about to fall off their country's economy.
After a year and a half, Costa Rica's colon is depreciating against the U.S. dollar. Officially measured inflation is running at more than 10 percent a year. The U.S. rate is consistently lower. Basic economics says the colon must fall and in the last couple of weeks, it has.
Even the mighty euro is wobbling a bit. It was reported that the euro area's monthly trade balance has swung into deficit. That by itself doesn't mean much, but it does mean there is a net European demand for imported goods, which is a good thing for countries outside its borders that worry about an economic slowdown.
What does it mean for collectors? Well, too much stock shouldn't be placed in short-term currency fluctuations, but for gold buyers whose sole argument for buying is U.S. dollar weakness might need to find something else to hang their hats on.
Far better to buy collector coins, the demand for which is long-term and whose prices tend to rise with American incomes and inflation. Collectors get the gold and silver content as a kicker. Buying collector coins means you don't really have to worry about the dollar or how the people of Argentina view it. You will have more fun, too.
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