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Von Aldo

Goldman says: Short the Dollar

The Vampire Squid, sucking the life out of America for its own gain?In a Wall Street Journal blog yesterday, reporter Mark Gongloff writes: "Oh Vampire Squid [Goldman Sachs], the dollar has been so good to you and this is how you treat it?

"Goldman Sachs is just out with a note saying it is going short the U.S. dollar because the of the Fed. Which probably means it is really long, but whatever. The dollar is actually jumping today [Wed.] in a safehave bid . . ." So I asked our own Brad Zigler, who used to research and make ETFs at Barclays, how retail investors could short the dollar.

Brad writes: "As for the short dollar play, a basket approach can be taken through purchases of the PowerShares UDN exchange-traded fund. UDN holds short USDX futures contracts which replicate the performance of being short the US dollar against the euro, the yen, sterling, the Canadian dollar, the Swedish krona and the Swiss franc.

"The problem with the basket approach is that it's, well, a basket. The euro and sterling, as well as the yen, have hardly been stalwarts in the current crisis. Just look at how they've all sunk against gold. The Swiss franc, on the other hand, has been a refuge for flight capital, despite efforts by the Swiss National Bank to staunch speculative inflows.

"Being more selective, one could buy the Swiss franc, effectively going short the greenback, with the Rydex CurrencyShares Swiss Franc Trust (FXF). That, coupled with a long position in gold -- most cheaply obtained through the iShares Comex Gold Trust (IAU) -- should be all the short dollar short exposure anyone would need as long as the panic mentality holds."

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