The direction of the Euro......

[Value Buy]

seems to be downward due to Greece, followed by Italy Ireland and Spain economic problems.
Anyone have an idea how the dollar will come out of this?
Of course it should be stronger, but does it take a haircut too, because we are so economically tied up with Europe?
How will this affect the price of crude oil?
Is gold finally, the only place to be this fall?

[rovo]

I agree with the premise of a weaker Euro based upon the problems in several Euro based countries. How will it affect the dollar?

A weaker Euro will make exporting to Europe more difficult, exporting from Europe easier, and as such will probably do further damage to our balance of trade. I would also expect our current leaders to do some damage control for the European banks. Our banks will also probably be severely hurt as there is so much cross linking of debt and derivatives.

Oil may initially rise but should then adjust downward because of the demand power of the U.S. and European economies. If neither of these two can afford oil the Mideast will be swimming in it.

Gold may offer a solution but I would be very cautious due to the current high price of gold. I was reading an article on Kitco (gold site) where they estimated the price of gold was more than twice what it should be because of speculation.

One possible safe area could be Swiss Francs because they have held up well of late. Switzerland does not rely on the Euro and has their own currency and a very vibrant economy based mostly on exports. They could be harmed by the strong Franc compared to the Euro and the $ as their exports become more expensive.

A nice comparison is the SF via FXF compared to the Euro via FXE. Both of these funds are somewhat liquid and trade like stocks. The Euro fund, FXE, has much more trade volume at about 2,000,000 shares per day than FXF at about 225,000 shares per day.

In the last 3 months the Euro has declined about 3.5% and Swiss Franc has increased by about 7.8%. Price changes are measured in dollars.

There is no easy answer but at least the above is a suggestion worth investigating.

[Trongersoll]

Something else to consider. If the value of the Euro goes down, stocks in European companies will cost less to buy. Of course, the value of any dividends they pay will go down as well. If you think that this is just a dip then it might be worth jumping in.

Full Disclosure: Currently holding VLKAY, BAMXY, FIATY, & IDV.