Safe Forex Havens in an Overpriced World

There appears to be too much cash chasing too few assets all over the world. The inherent risk in this situation is that one or more asset bubbles will collapse taking the world or at least many national economies with it. Thus we look for safe Forex havens in an overpriced world. What happened? How will $10,000 an acre Iowa farms and $240 million London apartments affect currencies and relative foreign currency rates? Read on for our take on safe Forex havens in an overpriced world.

Asset Bubbles Everywhere

There has been a competitive devaluation of Forex currencies going on for at least a year. More and more central banks are buying other currencies, setting low interest rates, or running up debt as a means of reducing the value of the home currency. Some nations are essentially printing money to increase the money supply and keep their economies from tanking. It used to be that Japan, followed by Taiwan, followed by China did this to keep their currencies cheap in order to gain a competitive advantage in exporting to the West. But, in the aftermath of the worst recession in three quarters of a century the USA and European Union, the two largest economies in the world jumped on board this train. We posed the question, who will win this competitive devaluation of currencies? And how can a Forex trader make a profit? Now as the devaluation of currencies via expansion of asset bubble expands should those with assets look for safe Forex havens in an overpriced world?

Interest Rates and Return on Investments

When the prices of things go up the rate of return on investment commonly suffers. When interest rates on bonds fall the prices of bonds commonly rise. What happens when interest rates go up? What happens when banks demand their money on non-performing loans that occur because someone borrowed way too much money to buy an asset that does not make enough money to support the principal and interest required to pay back the loan?

Fear of Currency or Currencies

Gold was the safe haven for many as it rose from $200 an ounce to $19,000 an ounce and now even gold bugs are thinking twice as gold hovers in the $1,300 an ounce range. So, folks with money are bidding up Iowa farm land, apartments in London and many other overpriced assets. This in many ways appears to be a flight from currency. But if you want to keep your money what are safe Forex havens in an overpriced world? A useful way to look at this is to look at where direct foreign investment is going. Take a look at a bit of useful info from the 2013 United Nations World Investment Report.

Foreign Direct Investment Comparison of 2007 and 2012

In Billions of USD

Taken from the United Nations World Investment Report 2013

Nation

2007

2012

European Union 859 323
UK 200 71
France 96 37
Germany 80 67
North America, incl. Mexico 363 408
Canada 117 54
USA 216 329
Mexico 31 26
Japan 23 123
China 84 84
China, Hong Kong 62 83
South Korea 9 33
India 25 9
South Africa 6 4
Russian Federation 57 51
Brazil 35 -3

Money today is flowing into The USA, Japan, South Korea and Hong Kong. If where investment is going is a measure of safe haven Forex trading look to the currencies of the USA, Japan, Korea and Hong Kong as safe Forex havens in an overpriced world. As always do your own homework and be suspicious of Forex tips.