Chile Forum

The massive imbalances exploding in the 2008 crisis have not been resolved, if anything they've been expanded and socialized through US and European bailouts. Right now there are arguably bubbles in US Treasuries and Asian real estate in some places. Note that Chinese holdings in said T-bonds peaked a couple of months ago. Japan is still buying. It's hard to read because of purchases through proxies (mostly in the UK it seems) but I expect more crazy FX volatility, I just don't know when and what will ignite the powder keg.

For expats in Chile with USD income, it's probably best to hedge your bets. When the USD is at a decent rate, change and invest in stable assets here, like real estate. For EUR holders, sorry but I think the window of opportunity is closed and might never go back to its peak from early last year (800-920). The EUR in CLP (644 right now) is cheaper than the USD in CLP at peak less than two years ago. We cannot repeat enough that FX goes through wild, unpredictable swings. Be careful and don't put all your eggs in the same basket.

A side note on economic bubbles, one closer to Chile. We have relatives that own land in Costa Rica. They returned from a trip there last month and report many, many "for sale" signs and ads on high-end condos where the norm was "for rent" in past years. Anecdotal I know, but it makes me wonder if the bloom is off that real estate rose. Are the developers and banks (re)learning the age-old lesson that trees don't grow to the sky, even when they are fertilized with rich expat manure?

Great chart Rune. We all know what happens if they try to divide by zero!

I do a fair bit of investing using candlestick charts, though I am not a professional, and do not give financial advice. That being said, I am seeing the possibility of big bounce coming in around this level, possibly a reversal based not just on the December/January pivot levels, but also on the copper charts, which generally run inversely to USD/CLP. (That is the higher the price of copper, the higher the peso is "worth"). DYODD, etc. etc. but just a heads up.

Do you think we will be getting more Chilean Pesos for one USD or fewer?

Zenth, the currency pair is generally quoted as USD/CLP. The first number is the quoted currency, meaning 1 USD, so when I say up or down, I mean the USD. Since we have been in a fairly sharp downward move since July 20th, when we had a failed breakout on the chart, when I say bounce I mean a move up in the dollar (a dollar buys more pesos). To be sure this is a short term move, and we will see if it turns into something bigger. Indeed, just a couple of hours after my post, we came into the level that I was seeing, around 495 and have already bounced off it, currently around 499. My target area was 510. Technical analysis isn't a perfect crystal ball and it is subject to interpretation. In other words, take it with a grain of salt. However, looking at a confluence of charts, including copper, I see the possibility that this move could be something more, a much bigger move. However it is prudent to consider all possibilities, including the one Spencer mentions.

There is an old saying on Wall St....the Market can remain irrational longer than you can remain solvent. While we are all aware of the long term trajectory of the US dollar, nothing moves in a straight line. A lot of people have lost a lot of money betting on the obvious, but it's all about timing. I see much more carnage for the Euro in the immediate future than the dollar. (Though long term it is the opposite). It's all about knowing your time frame. Anyhoo, I've been on quite a roll recently with the calls, so I'm sure this one will be wrong since it's on a public forum.

I have no interests in trading currencies currently, I mainly trade equities. Do your own due diligence, This is not financial advice, etc. etc.

kastism,

What are your time frames if I may ask

Just conversation and NIA.

498 to 499 or even 500ish to 509 is not much of a bounce for us ATM machine raiders though I do hope it gets to at least 506 or more before next month's expenses need to be funded.

Runey, you are posting and not being quiet