These ETFs Are Waiting For A Strong Dollar Policy

strong-dollar“Until recently, betting against the U.S. dollar has been a pretty safe bet. With rock-bottom interest rates and the coordinated efforts of the Federal Reserve and the U.S. Treasury to inject liquidity into the financial system, it is no wonder that the buck has taken it on the chin around the globe,” Matthew Schifrin Reports From Forbes.

Schifrin continues saying that, “Steve Forbes has been pounding the table for a strong dollar policy–in fact he advocates linking it to gold–and warns that we could be headed for a repeat of the dismal economy of the 1970s unless the Fed gets its act together. Fellow central banks are actually making the Fed’s money printing enterprise look modest by comparison and this has helped boost the dollar in relative terms against other fiat currencies. A number of gurus believe that the Fed, as it becomes more hawkish, will embark on monetary policies much more in tune with a strengthening U.S. dollar in 2010.”

“One way of betting that the dollar will strengthen is to short the collectible everyone hoards when they think money is becoming increasingly worthless. Jim Lowell advocates buying Proshares Ultra Short Gold (GLL), which delivers twice (200%) the inverse (opposite) of the daily performance of gold bullion. At the same time he is betting directly in the resurgent greenback, with PowerShares Dollar Bull (UUP) ETF,” Schifrin Reports.

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Here are some details on the ETFs mentioned.

The investment (UUP) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Long US Dollar Futures index. The index is comprised solely of long futures contracts. The futures contract is designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

The investment (GLL) will seek to replicate, net of expenses, twice the inverse daily performance of gold bullion as measured by the U.S. Dollar p.m. fixing price for delivery in London. The fund normally invests assets in financial instruments with economic characteristics inverse to the index. It may employ leveraged investment techniques in seeking its investment objective.

Chart for UltraShort Gold ProShares (GLL)


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