As I am sure you are all aware, after the Brexit vote, the UK currency has been steadily pushed down against all of the other major currencies like the US Dollar.
As of Thursday Oct 6th, it was at 31 year-low. Now it is ALL-TIME low.
On the surface, this may seem a curse, but let me share my opinion, since we have forecast this from the highs and recently pre-Brexit: https://gracecentury.newswire.com/news/grace-century-research-releases-its-mid-year-adjusted-2016-annual-10956298 .
- We have been here before: This happened in the 1980’s. The Dollar was seen as king and a one way path. Believe it or not, even the gold-backed Swiss franc was at $0.50 vs the Dollar. Currencies move in wide ranges over multiple years. Just realize that many countries try to proactively weaken their currency to make their goods more appealing. By the way, the UK ‘s rain will still rain, the dogs will still bark, and sun will still shine (even if you can’t see it).
- Brexit is still years off: This is still not a 100% done deal. With that being said, I have seen (as an American) a lot more people accepting that this is probably a good path, and that it is going to happen. I believe in the long run things will be worked out and it will benefit the UK.
- If you are invested in U.S. projects, you are in USD: We are not speculating on currencies, but as you have invested in US companies, your investment has increased in currency basis 30% in the last 3 years. That’s a good thing!
What this means and where do we go from here?
I have always urged everybody to think like summer in winter and vice-a-versa. When nobody wants something that’s the time to look to buy it. The same goes for something that everyone wants, time to look to get out.
This is an opportunity for USD holders to start to build a position in UK positions; I see this possibly going to $1.18 vs. the USD – I believe we will be down in this area for a good time, though, so it doesn’t have to be at once.
So if you were considering USD investments like Grace Century’s projects that are not looking to pick up %’s, it should be a non-issue. We build companies which are looking to multiply many-fold.
This currency cycle / move has developed over many years…it won’t change overnight…however now is the time to start thinking about holding some Sterling.
It might take some time to work through the system, but I believe it always does and the cycle will repeat itself.
This might mean buying a UK house, or at least diversifying a little into UK stocks.
You will have time, but it should be on your radar.