When These People Talk, We Should All Listen. Usd Is Going Down!

[TRIPxCORE]

Bill Gates tells Davos the dollar is going down and his money is elsewhere

February 1, 2005

By James Hertling and Simon Clark

Davos - Bill Gates and Warren Buffett, the two richest men, are partners in business, bridge and travel. Now they are both predicting the dollar will weaken.

Gates, the chairman of Microsoft, said he expected the dollar to extend its three-year fall because of widening US trade and budget deficits.

"I'm short the dollar," Gates said in a television interview this weekend at the World Economic Forum in Davos, Switzerland. "The ol' dollar, it's gonna go down."

Buffett, whose personal fortune of more than $42.9 billion (R255 billion) is topped only by Gates's $46.6 billion, has been buying foreign currencies since 2002, citing the US deficits.

Their concerns were echoed in Davos by policy makers including European Central Bank (ECB) president Jean-Claude Trichet and investors such as George Soros.

The dollar has fallen 26 percent against a basket of six major currencies since the start of 2002.

The trade deficit swelled to a record $609 billion last year, and the Bush administration expects the budget shortfall to reach an all-time high of $427 billion in the year to September.

"It is a bit scary," Gates said of the US's $7.62 trillion in debt.

"We're in uncharted territory when the world's reserve currency has so much outstanding debt."

Buffett, who is the chairman of US-based investment company Berkshire Hathaway, bought $1 billion in foreign currency contracts in the third quarter, bringing his total to $20 billion of forward contracts in eight currencies on September 30, according to Berkshire.

The currency position gave Berkshire a $412 million pretax gain in the quarter as the value of the dollar fell.

Buffett said in an August interview: "That's a long-term position. I have no idea what currencies are going to do next week or next month or even next year. I think I know over time."

Gates topped Forbes magazine's list of the richest people in 2004, with Buffett second. Almost all of Buffett's wealth is in Berkshire stock.

Karl Albrecht, an owner of the Aldi supermarkets in Germany, is third with $23 billion.

The shared view of Gates and Buffett on the dollar is not the billionaires' only joint interest. Gates revealed a $319 million stake in Berkshire Hathaway on December 21, a week after he joined the company as a director.

The two play bridge and have travelled together, taking a 1995 train trip through China.

Buffett made his first investment in China in 2003, buying a stake in PetroChina.

In Davos, Gates described China as a potential "change agent" for the next two decades.

"It's phenomenal," Gates said. "It's a brand new form of capitalism."

In September Gates's $27 billion foundation received approval from China's foreign currency regulator to invest as much as $100 million in the nation's yuan shares and bonds.

The comments by Gates about the dollar came a week before Group of Seven officials meet to discuss currency policy and were echoed by officials from Europe and Asia.

Trichet said in a Davos panel discussion: "The governing council of the ECB has repeated a very, very short sentence, namely that the sharp moves upward of the euro [against the dollar] were unwelcome and that we thought they were counterproductive from the economic growth perspective."

US growth hit a five-year high of 4.4 percent in 2004, outpacing Europe for the 12th time in 13 years. The euro region probably grew 2.1 percent.

German deputy finance minister Caio Koch-Weser said in an

interview in Davos the US budget shortfall was "the number one risk, disregarding geopolitical risks" to the global economy.

He urged US President George W Bush to present a "credible" plan for getting the deficit under control.

Chinese central bank adviser Yu Yongding said in Davos that Washington should do more to tackle its record current account deficit and ease pressure on China to loosen its currency's peg to the dollar.

[britmaveric]

Trip ...Still waiting for the doom/gloom to occur, even if this is a nearly year old article.

Edited January 25, 2006 by britmaveric

[haha]

if you don't like the usd, get something else.

[Smokin Joe]

I was looking for a Thailand forum, anyone seen one around here?

[TRIPxCORE]

I was looking for a Thailand forum, anyone seen one around here?

This is the business sub-forum where matters of business are allowed to be discussed. You can see the title of the topic before entering the thread. If you dont want to read about this, then dont click on the thread and keep yourself in the sub-forums where only Thailand is discussed.

Trip ...Still waiting for the doom/gloom to occur, even if this is a nearly year old article.

Honestly, I didnt even pay attention to the date of the article. I saw it on a forex website and I have no idea why they would post a year old article on there. Nevertheless, it is still relevant and I know we still have differing opinions about it Brit but we shall see.

if you don't like the usd, get something else.

Believe me, I have. Have not been in USD for the past 3 years!

[thaistick]

2005 was the big spike/stophunter/shakeout the big guys orchestrated to screw the masses of little guys.

After 3 years of dollar decline,all of a sudden Newsweek makes the declining dollar its cover story early last year,then WHAMO! the dollar reverses direction and goes the opposite way.

Coincidence?

The market makers who control everything especially the media know what they are doing.

They can buy dollars cheap or sell dollars dear to the small guys with a little psychological manipulation through CNBC,Business Week,,etc.

The underlying USA economic fundamentals and historical debt is still there and rising interest rates,which are about to end,can't save the dollar.

Still,gold is safer than euros,Swiss francs,yen,yuan,and all printed fiat paper money.

When the dollar goes the way of the peso,it will be economic armageddon time and the ones sitting on a pile of gold bullion coins on a South Seas island will be able to buy the world.

[Ricardo]

Unless that South Sea island disappears under the waves - as a result of global warming

Put your money into inflatable life-rafts, while they're still cheap

[sleepyjohn]

After 3 years of dollar decline,all of a sudden Newsweek makes the declining dollar its cover story early last year,then WHAMO! the dollar reverses direction and goes the opposite way.

Coincidence?

Yes Thaistick....I had been looking at the charts last year, and fancied the $ for a rise technically, but that Newsweek cover was the last contrarian straw, and I converted my whole trading account to $ at an average of 1.895 to the £.

It's one of the best timed moves I ever made, and the £ started dropping immediately.

NEVER believe what you read in the papers....and that includes what you hear about the $ right now and also by the way gold.

Why would you take advice from Mr Buffet, decent chap though he seems, when he is short the $?

The price of the $ discounts in all known facts, and probably a few that are not public knowledge. It could go either way.

Unless you are capable of making your own analysis, a good strategy would be to spread your assets around a small group of currencies, including some emphasis on the one you spend money in.

Good Luck.

Edited January 26, 2006 by sleepyjohn

[britmaveric]

$ is pretty stable - not going anywhere but up I'm afraid.

[wincen]

The underlying USA economic fundamentals and historical debt is still there and rising interest rates,which are about to end,can't save the dollar.

Still,gold is safer than euros,Swiss francs,yen,yuan,and all printed fiat paper money.

When the dollar goes the way of the peso,it will be economic armageddon time and the ones sitting on a pile of gold bullion coins on a South Seas island will be able to buy the world.

I don't believe in doom and gloom. I've been hearing it for ever. Things alway seem to regulate themselves. I wouldn't bet too much against the US.

IMHO it all went down hill when I couldn't get Thai stick anymore back in the 80's Thank God for the Mexican exporters!

LOL

Edited January 26, 2006 by wincen

[Gary A]

Let's face it. If anyone knew what a given currency was going to do they would be VERY rich and wouldn't have to worry about what the rest of us thought. As for me I don't like what the baht dollar are doing right now. Fortunately I live on about 25% of what I have available so it's not a great concern. When I first came over here to live the exchange rate was 25 baht to a dollar so I am still far ahead.