Author Topic: Ruble vs Dollar Investing  (Read 20624 times)

Cid47

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Ruble vs Dollar Investing
« on: December 11, 2014, 04:58:35 AM »
I'm an American expat, currently trying to make it work in Russia (wife's Russian, we have a child, will probably be here for at least the next five years. I get paid in Rubles, but have some side income in dollars from a rental property that I have stateside. I'm basically looking for any advice that concerns investing in Rubles vs investing in Dollars.

To give a better picture, you can find 1 year CDs over here with an APR of 14% in RUB, or for 7% in USD (interest paid at the end of the term). I am leery of putting all my eggs into the rubles basket even with the large yield as the exchange rate has gone from 32:1 to 53:1 in the past 12 months. On the other hand, it would have to drop to at least 104:1 over the next year for the ruble CD not to be the better investment.

If anybody has any advice or any knowledge/experience of the Russian market, I'm all ears.

walkerjks

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: Ruble vs Dollar Investing
« Reply #1 on: December 11, 2014, 07:04:15 AM »
First, are you likely to leave Russia sometime after 5 years?  If so, savings in dollars with earnings in rubles should be the lower risk bet (who knows which will end up being the better bet).

To give a better picture, you can find 1 year CDs over here with an APR of 14% in RUB, or for 7% in USD (interest paid at the end of the term). I am leery of putting all my eggs into the rubles basket even with the large yield as the exchange rate has gone from 32:1 to 53:1 in the past 12 months. On the other hand, it would have to drop to at least 104:1 over the next year for the ruble CD not to be the better investment.

Not sure your math is right here.  The Ruble only has to fall approximately 7% (technically 6.54% based on 1.14/1.07) in a year for the Russian CD to be even with the USD CD.  Over a 1 year time frame, who knows what will happen?   If oil prices go back up, the Ruble likely will as well.  If the Ukraine situation is resolved and sanctions are lifted, the Ruble is likely to go up.  But could it continue to melt down?  Absolutely.  Savings in USD (or other reasonably safe currencies, like Euros or Swiss francs) seem like lower risks.

RyeWhiskey

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Ruble vs Dollar Investing
« Reply #2 on: December 11, 2014, 10:49:44 AM »
I'd invest in dollars. You already work in Russia and earn your paychecks in Rubles, why double down? This becomes especially poignant when you consider that you may not remain in Russia, hence investing in a safer currency makes even more sense.

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #3 on: December 11, 2014, 06:16:37 PM »
Many market signs are pointing at a continually degrading US dollar due to inflations.

I would bet on russian currency due to it being part of the BRIC, as well as it having exceptionally low debt amounts, large curency reserves, high amounts of gold reserves, as well as being a world major oil producer.

Also another thing most people forget, but russia has the worlds largest diamond mine as well, which has been assessed at a reserved estimate to be able to produce enough diamonds for the world for the next 3000 years, and russia hasnt tapped into it yet.

Just food for thought.

dungoofed

  • Pencil Stache
  • ****
  • Posts: 661
Re: Ruble vs Dollar Investing
« Reply #4 on: December 11, 2014, 06:20:15 PM »
Knowing what I know now, I'd open an account with a discount brokerage in Russia (better if you can find one that is not FATCA compliant) and the same in the US. I'd alternate between saving $5000-worth and wiring it back to the US to invest there, and saving $5000 and investing it into the market via your Russian brokerage.

Theoretically $100 of (unhedged or hedged, it doesn't matter) VTI will appreciate the same amount no matter the currency in which it is denominated.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #5 on: December 12, 2014, 01:20:04 PM »
The Ruble is headed only one way: down. Putin spent $90billion of the reserves and has what to show for it? Nothing! Just a delay of the inevitable...... He could have bought a boatload of airplanes, iPhones, stock in Apple, etc. and he'd have more to show for it than he does now.

The sanctions due to the whole Ukraine thing hurt, but not nearly as much as the fall in the price in oil. Last month (?) when the ruble was at 44/usd I called my currency trader and asked about shorting the ruble. I could have levered up a few $100,000 and made a killing. But, I thought it was too risky and I guess it still is ....

The ruble won't stop dropping until:
1) All the oligarchs get ALL their USD out of the country.
2) Putin exits the Ukraine. Since he won't do that, this means that the ruble will keep dropping until Putin leaves. And Putin won't leave easily or politely which means social unrest on the horizon before the ruble stops dropping. So, yes, in four years 104/usd is completely on the table.
AND:
3) Price of oil increases. This may be another year or two.

One big red flag for me: Why would a Russian bank offer 7% interest on USD deposits? Banks in the USA don't even charge that much interest on loans in USD. So, what are they doing with the money? ? ? I see a bank with a bad balance sheet and facing bankruptcy on the micro level or else nationalization at the macro level. No other reason to offer such fat interest rates--try and attract capital from abroad. Again--why?

In short, if I were you, I would get ALL my assets out of Russia, except for the ones I can afford to lose.

P.S. Normally I am an optimist. And, I am optimistic, but not about Russia.

mxt0133

  • Handlebar Stache
  • *****
  • Posts: 1559
  • Location: San Francisco
Re: Ruble vs Dollar Investing
« Reply #6 on: December 12, 2014, 01:46:32 PM »
To give a better picture, you can find 1 year CDs over here with an APR of 14% in RUB, or for 7% in USD (interest paid at the end of the term).

Reminds me of Iceland bonds and cash deposits yielding 10-15% round 2007-2008.  Until the banks went under.

You have to ask why they are paying so much vs everyone else.  Unless you time your exit before the SHTF I would not invest in those deposits.  Try your best to keep up with inflation but other than that convert to dollars and invest it if your long-term plans are to return to the states.

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #7 on: December 12, 2014, 02:03:42 PM »
The Ruble is headed only one way: down. Putin spent $90billion of the reserves and has what to show for it? Nothing! Just a delay of the inevitable...... He could have bought a boatload of airplanes, iPhones, stock in Apple, etc. and he'd have more to show for it than he does now.

The sanctions due to the whole Ukraine thing hurt, but not nearly as much as the fall in the price in oil. Last month (?) when the ruble was at 44/usd I called my currency trader and asked about shorting the ruble. I could have levered up a few $100,000 and made a killing. But, I thought it was too risky and I guess it still is ....

The ruble won't stop dropping until:
1) All the oligarchs get ALL their USD out of the country.
2) Putin exits the Ukraine. Since he won't do that, this means that the ruble will keep dropping until Putin leaves. And Putin won't leave easily or politely which means social unrest on the horizon before the ruble stops dropping. So, yes, in four years 104/usd is completely on the table.
AND:
3) Price of oil increases. This may be another year or two.

One big red flag for me: Why would a Russian bank offer 7% interest on USD deposits? Banks in the USA don't even charge that much interest on loans in USD. So, what are they doing with the money? ? ? I see a bank with a bad balance sheet and facing bankruptcy on the micro level or else nationalization at the macro level. No other reason to offer such fat interest rates--try and attract capital from abroad. Again--why?

In short, if I were you, I would get ALL my assets out of Russia, except for the ones I can afford to lose.

P.S. Normally I am an optimist. And, I am optimistic, but not about Russia.

Id have to totally disagree.

If oil is your answer, then you should be bailing on the US market as well, and canada, and brazil, and venezuala, because all of them have taken MASSIVE hits because of oil prices. Russia is one of the only markets that can actually survive a massive oil price dive, specifically because the russians can produce it at 4/barrel.

Canada's market is what just got annihilated. Why are we only talking about russia? Look at canada. Canada's dollar just went from 1.25 to ~.8 vs USD. That's a HARDCORE drop.

Canada's primary income IS OIL, while russia has massive amounts of trading partners of all kinds.

Also, with the way trade accounts are headed, the USD will soon no longer be the world reserve currency, and when that happens, the USD will plummet.

Also, trade accounts at 7% is a under valuation assessment. Russia offers treasuries at 10.5-14% to standard market goers. What the 7% means is that Russia values USD less than other currencies.

I do a lot of currency trading, and so do my friends, and we are all betting on the russian ruble to rise in value.

Addressing the currency drop that russia did, yes, they dumped a bunch of currency, US CURRENCY.

They also dumped over 100 BILLION dollars of US Notes and Treasuries as well, and have in the past 4 years dumped another 400 BILLION more.

The russians arent bleeding losses, they are dumping US currency reserves, and the correction is a temporary drop in currency. They lost reserve, its an obvious fact. They also got rid of bad investments, which is in the LONG RUN a waaay better play.

Putin has been exceptionally good at getting Russia out of the dark ages, and making them very financially strong.

As for Oil Prices, OPEC, and several other oil producers, have already said that the Oil prices are absolutely going to go back up, which we all know is a reality. Its only so long before the excess oversupply is consumed, and saudi arabia (the culprit here) stops mass dumping their oil and runs out of reserves. NGLs are assessed to only last until roughly 2028 at best, so they arent even close to ever going to be a replacement to oil, so lets go ahead and shoot that down too while we are at it.

The only reason why the market is even where it is now is because ISIS is dumping Syrian Oil on the market for less than 30/barrel to fund their organization, and its causing the saudi's to sell theirs for cheaper, which had a domino effect on the market.

Once the mess that the US, (yes that's right, the US caused, armed, funded, formed ISIS, and caused their rise of power), blows over, the markets will return to normal. Might even happen before then.

Also trade sanctions on Russia by the EU will effectively end soon, as the EU (big Surprise) needs RUSSIAN OIL to make it through the winter. They need their gas too. Who knew? Oo thats, russia knew.

They also knew that the food embargo would fail as well, as Russia has already announced they have moved the majority of their food trade to china, with the remaining amount going to brazil in the very near future (Mid term next year). Once that happens, the 2 billion dollar embargo by the EU will have been neutralized, and the only losses were short term, and now the EU has yet another major food shortage to contend with. (By the way, don't know if you've been watching UK news recently, but people are freezing to death there and starving. Just an FYI)

Another thing of great note is that the only major impact that the US currently has left remaining on Russia is the banking sanctions, which with mastercard, visa, and the new japanese transaction system going in, will be effectively neutralized by if Im not mistaken no later than Q2 of next year.

With the dawn of that system, the overall effectiveness of the sanctions by both the EU and the US will fail, and will be inert.

Even worse still, the US knows this, and is sending in heavy weaponry to the Ukraine (Tanks, fuelers, haulers, and armor towing vehicles seen near latvia recently) so that a physical engagement can be prepared for if nothing else.

The EU needed the Ukraine to boost the Euro, but the Euro is going to fail, and it was a bad deal for the Ukraine, and they knew it. The clock is ticking on the Euro anyways. Germany is up to its ears getting sick of dealing with hand out after hand out, theyve already announced that (They also recently opened a major trading accoutns system at their central bank for trading in YUAN).

Greece will most likely be the first one to leave the Euro though, due to its horrible austerity measures, and the obvious rise and impending election of the Syriza party, who will no doubt be elected by landslide popular vote. GG for the euro once that happens. Germany has already tried to leave the EU several times, and once someone else leaves first, the curtain will faill on the Euro, and it will collapse as everyone runs for the door.

The whole damn debacle is embarrassing honestly, between the US, the Russians, the Chinese, the BRIC, and the UK, Ukraine, and all the markets caught in the middle.

Also, just an fyi, a few 100,000 in leveraged currency isnt much, many accounts offer a 100:1 on currency, and most I have give me 200:1.

I'm waiting till about Q1 2015 end to leverage, and put my money on an increase on ruble. I expect to make on the ballpark of 6-8M on it. Another good one to bet on is Canada. Their currency is pretty much glued to the price sticker of oil.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #8 on: December 12, 2014, 02:07:43 PM »
I have to say in my loudest voice: I agree with mxt0133.

Google these terms:

1992 sweden devaluation
1992 UK pound devaluation
1997 thai bhat devaluation
George Soros "break the bank"

The professional currency traders around the world smell blood in the water. Heck, I'm a regular joe and I smelled the blood at 44/usd. People who do this for a living (I'm looking at you, George Soros) are the ones who pushed it to 44. They have billions at their disposal and they are levering that and placing huge bets against the ruble.

So, against this backdrop, Cid47, as a regular person you need to get out of the ruble to the greatest extent possible for the sake of your financial health. Buy USD notes now, even if it's at a kiosk on the street. Then when you need the money you can change it back to rubles. I can guarantee (!) that in one year you will make more than 14%, even after transaction costs. Putin will burn you and not think twice about it.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #9 on: December 12, 2014, 02:28:45 PM »
Fallenour: I think that you and I disagree on many different fundamental levels. Instead of arguing about it I propose the following: We check back on this thread in one month: January 12 and see where the Ruble/USD exchange rate is? That way we let the market decide which of us is right?

I always wondered who would take the other side of a short-ruble trade. Now I know!

I would like to read more about Russian extraction costs of $4/barrel. Please forward me a link where I can educate myself.

Btw: I know that some companies offer 100:1 leverage with major currency pairs (usd/eur/chf/jpn/gbp). My broker only offered 10:1 on the Ruble as they called it an exotic currency:(

PS: Do you get all your news from any source other than RT? Or Russian language television?

dungoofed

  • Pencil Stache
  • ****
  • Posts: 661
Re: Ruble vs Dollar Investing
« Reply #10 on: December 12, 2014, 05:30:58 PM »
Another thing of great note is that the only major impact that the US currently has left remaining on Russia is the banking sanctions, which with mastercard, visa, and the new japanese transaction system going in, will be effectively neutralized by if Im not mistaken no later than Q2 of next year.

With the dawn of that system, the overall effectiveness of the sanctions by both the EU and the US will fail, and will be inert.

Are you perhaps referring to Russia's answer to SWIFT? I got frustrated at the lack of hard facts in Western media (and I admit I am to blame for not being able to speak Russian nor Chinese) but the impression I had was that it was started by Russia but... somehow going to be integrated into the BRICS' New Development Bank (spearheaded by China) or something. I have Q2 2015 in my mind for some reason too, but I can't recall where I saw it.

To be honest, between the segregation of SWIFT, European opposition to US sanctions against Russia, the rise of Bitcoin and other alternative, anonymous payments systems, physical PMs, and now this complete competitor to SWIFT in the works, I don't really see a threat of sanctions as credible. Russia can print and move Ruble unhindered already.


Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #11 on: December 12, 2014, 06:59:19 PM »
Fallenour: I think that you and I disagree on many different fundamental levels. Instead of arguing about it I propose the following: We check back on this thread in one month: January 12 and see where the Ruble/USD exchange rate is? That way we let the market decide which of us is right?

I always wondered who would take the other side of a short-ruble trade. Now I know!

I would like to read more about Russian extraction costs of $4/barrel. Please forward me a link where I can educate myself.

Btw: I know that some companies offer 100:1 leverage with major currency pairs (usd/eur/chf/jpn/gbp). My broker only offered 10:1 on the Ruble as they called it an exotic currency:(

PS: Do you get all your news from any source other than RT? Or Russian language television?

Not in january, lets make it february 14 my beloved LOL. More specifically because its half way through Q1, which is why I really want thta date instead, because thats when I plan on making my first buys on le ruble.

I do have some resources for you:

http://judithcurry.com/2013/02/11/iea-facts-and-fictions/

http://www.bloomberg.com/news/2014-12-12/iea-cuts-global-oil-demand-forecast-for-4th-time-in-five-months.html

http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-independence-by-2035-on-shale-boom-iea-says.html


If you look deep enough into these articles, you will find a few important things.

They are this:

OPEC,primarily Iran, Iraq, and Saudi now, have said that prices WILL RETURN to normal.

Right now it is Saudi Arabia who is spearheading this massive plunge of oil prices.

Saudi Arabia just closed one of its largest oil fields in Kuwait, which means its empty now, and no more oil to sell, which is bad for its political posturing, means they are running out of oil in a sense, especialyl since many of their untapped fields are minor. (100 m barrels or so)

The chinese bought a massive amount of oil recently, maxing out their reserve capabilities, but their growht has not stalled, in fact, china just was announced as becoming the largest economy by important factors. PLease google that, thats too much typing for me. Sorry :(.

The US recognizes that their financial sanctions is all they can realyl do to russia, and with russia having restored most of its lost revenues from EU sanctions, oil is the only remaining factor.

The US current currency increase is occuring due to the stopping of QE, and we all know that. Its not because the dollar is worth any more, its just because we stopped printing so damn much of it. Our economy is actualyl doing worse. See below for why.

Shale production is the most costly of the oil producing avenues for the oil industry, and its a major player in the US income.

The US is projected to be number 1 in shale production by 2015, which means its NOT in the US best interest for us to continue to produce oil from shale while oil is below the market threshold of 80/barrel. Currently it is estimated that the US produces fracking and shale oil at around 70/barrel. That number specifically, I have yet to be able to independantly verify myself, although Ihvae it several times, but all from sources I view as non-authoritative.

Regardless of the number, it doesnt benefit the US to have oil at the current price. HOwever with the financial sanctions coming to end due to russia working with Visa, mastercard, and Japan for their new transacton system, the financial drag (the majority of the damage, estimated at 20%) is what is hurting russia the most. According ot multilpe sources, WSJ included, russia lost roughly 15% income from oil dropping, but has lost 35% total, which is reflected in their current currency drop. According to russia central bankers, russias currency is undervalued at about 20%. This is a biased source, so I dont trust it naturally.

All in all, what it all tallies up to, is that the US will benefit for letting the oil prices go up by using its relationship with Saudi Arabia by letting the oil go up in price, saudi arabia will benfit by making more on oil if they slow production, venzeula is going to fall off the map in economic implosion if the prices dont go up, and political pressures from canada to get the US to help the prices go up will only be further extended due to the fact that both they and Mexico are suffering horribly due to the prices dropping so sharply. Note Canadian dollar dropped from roughly 1.2-1.25 down to .8-.85. Thats a substantial drop, and related to oil prices, as canada is a major oil producer. Top 4 if Im not mistaken.

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #12 on: December 12, 2014, 07:05:56 PM »
Sorry Fallenour, I think you are 100% wrong and likely to get destroyed if you are betting heavy on the ruble rising.

I expect it to be 60 to the dollar very soon and near 70 to the dollar in 2015.

Maybe you should try something less volatile, like bitcoins?

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #13 on: December 12, 2014, 07:11:27 PM »
Sorry Fallenour, I think you are 100% wrong and likely to get destroyed if you are betting heavy on the ruble rising.

I expect it to be 60 to the dollar very soon and near 70 to the dollar in 2015.

Maybe you should try something less volatile, like bitcoins?

Actually bitcoin was one of the most valued investments I ever made. I got into bitcoin in the very beginning, when they were less than a dollar per coin, and noone valued them for anything. I sold at around 700.

I also made a fortune off of lightcoin as well.

Also, as for your bitcoin theory, https://www.cryptocoinsnews.com/new-usms-bitcoin-auction-for-30000-btc-ends-price-could-be-above-market-rate/

" The rumors from the last Silk Road Bitcoin auction suggest that Tim Draper, the winner of the June Silk Road Bitcoin auction bought his chunk of Bitcoin at an above-market rate. Don’t be surprised if that happens again. Additionally, it would be unreasonable to expect the winner of the USMS Bitcoin auction to turn around and dump his bitcoins on the open market."

So much for your "bitcoin is a bad investment" theory there.

Also, people are starting to use bitcoin as a standard country free alternative, especially now that mastercard can be used with them ;)

Just another thing about bitcoin I know that you probably dont :D

And one more thing. Bitcoin took a dip when those coins disappeared off the market. What do you think will happen when they come back?

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #14 on: December 12, 2014, 07:20:52 PM »
Ok...

So you got into bitcoin when it was less than a dollar a coin and sold at 700.

Assuming you invested a tiny amount, like $1000, then you made $699,000 profit?  (before taxes)

If you are investing a similar amount ($1000) in the ruble, then how much do you plan to make?

If you are investing more in the ruble, did you invest more than $1000 in bitcoin?  Like $10,000 (which would be a moderately small investment still)

If so you made $6,990,000 profit and probably don't need to bother living the MMM lifestyle.

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #15 on: December 12, 2014, 07:33:43 PM »
Ok...

So you got into bitcoin when it was less than a dollar a coin and sold at 700.

Assuming you invested a tiny amount, like $1000, then you made $699,000 profit?  (before taxes)

If you are investing a similar amount ($1000) in the ruble, then how much do you plan to make?

If you are investing more in the ruble, did you invest more than $1000 in bitcoin?  Like $10,000 (which would be a moderately small investment still)

If so you made $6,990,000 profit and probably don't need to bother living the MMM lifestyle.

unfortunately back then I didnt make as much as I do now. I got into bitcoin by mining it. Back when it wasnt difficult, and the calculation difficulty was relatively low. This was before the concept of using botnets and ASIC miners.

http://www.hackforums.net/

That was where bitcoin, litecoin, and many other forms of cryptocurrency really started to gain severe ground and popularity. When it began to go "mainstream".

Ive moved on to other places since then, but I still lurk there from time to time to see what else is becoming "mainstream" with cryptocurrencies, generic news in cyber that most US media sites wont post, chat with old friends, etc.

As for the ruble, I wont be betting on just the ruble. Ill be betting on the ruble, the canadian dollar, the brazilian real, and the newzealand dollar.

Im not betting on just russia, Im betting on common sense and the market. Oil prices must go up for everyone to do well, even OPEC knows that. The only question is when will the saudis stop the oil production, and I plan on waiting until canada hits its 7 year low, and russia dips to its 5 year low again, and then Im going to buy, and ride all 4 currencies up. I always mitigate my risk.

I plan on buying on margin this time, and I plan on putting around 40,000 USD 1:1 on a 200:1 against all 4 currencies.

Of all the currencies, russia has the lowest debts total to GDP ratio, and the highest chances of mitigating their trade risks, and offsetting the income losses. Of all the countries with oil only losses, canada is the highest, with 30%. Brazil is my next pick, because its part of the BRIC, and then lastly, with my lowest amoutn set to it, Im picking new zealand, because they have a lot of high cossts because they almost exclusivley need ice breakers to get to their oil, and extremely expensive oil container ships, which cost almsot as much as shale to harvst, store, and transport.




bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #16 on: December 12, 2014, 07:43:33 PM »


Not in january, lets make it february 14 my beloved LOL. More specifically because its half way through Q1, which is why I really want thta date instead, because thats when I plan on making my first buys on le ruble.

I do have some resources for you:

http://judithcurry.com/2013/02/11/iea-facts-and-fictions/

http://www.bloomberg.com/news/2014-12-12/iea-cuts-global-oil-demand-forecast-for-4th-time-in-five-months.html

http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-independence-by-2035-on-shale-boom-iea-says.html


Thanks for the links. Now, do you have a link where it states that Russia can produce at $4/barrel, as I originally requested?

Today the bid/ask on the ruble is 58.17/58.34 to the USD. As I originally stated, I believe the ruble will be lower than that on Feb. 14th. Also, I believe that on Mar.14 it will be lower than on Feb. 14th. I assume that you believe that one month after Feb. 14th it will be higher?

Let's re-visit this post then and see who is right.

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #17 on: December 12, 2014, 07:52:47 PM »


Not in january, lets make it february 14 my beloved LOL. More specifically because its half way through Q1, which is why I really want thta date instead, because thats when I plan on making my first buys on le ruble.

I do have some resources for you:

http://judithcurry.com/2013/02/11/iea-facts-and-fictions/

My apologies, and my sincerest apologies again.

I need to redact and correct my above statements, I got the saudi arabian and russia prices backwards.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB4QFjAA&url=http%3A%2F%2Fwww.petrofinder.com%2Fdealgate%2Fdown_load_deal.php%3Fdeal_no%3D258&ei=I6mLVMTZDom1sQT2lIGgDg&usg=AFQjCNFd8bhGROxwcVOmT3yfkWtgAQLScQ&sig2=roz9NcjrYXqNNRk1DV2xlQ&bvm=bv.81828268,d.cWc

That will take you to petrofinder, which will give you the prices of oil production for saudia arabia and russia.

The prices state 2-5 for saudi, and 10-15 for russia.

Please see near the top of page 2.

http://www.bloomberg.com/news/2014-12-12/iea-cuts-global-oil-demand-forecast-for-4th-time-in-five-months.html

http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-independence-by-2035-on-shale-boom-iea-says.html


Thanks for the links. Now, do you have a link where it states that Russia can produce at $4/barrel, as I originally requested?

Today the bid/ask on the ruble is 58.17/58.34 to the USD. As I originally stated, I believe the ruble will be lower than that on Feb. 14th. Also, I believe that on Mar.14 it will be lower than on Feb. 14th. I assume that you believe that one month after Feb. 14th it will be higher?

Let's re-visit this post then and see who is right.

AccidentalMiser

  • Pencil Stache
  • ****
  • Posts: 660
  • Age: 51
  • Location: SE Tenn
Re: Ruble vs Dollar Investing
« Reply #18 on: December 12, 2014, 07:58:50 PM »
Sorry Fallenour, I think you are 100% wrong and likely to get destroyed if you are betting heavy on the ruble rising.

This.  The USA, for all its faults, has a stable, sound monetary system.  Russia, well, doesn't.  Russia gets much of its cash flow from petroleum products.  America doesn't.

I'm not going to expend the effort to refute every point that has been made on this thread.  There's a reason the Russian banks pay 14% on rubles and 7% on dollars.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #19 on: December 12, 2014, 09:14:24 PM »
I think that Fallenour is just trolling us all. Also, I think that Fallenour learned Russian before he learned English. As they said in ancient Rome about the internet: Caveat Emptor.

This is one of many links available that all say how screwed Russia is with a low oil price and sanctions:

http://news.yahoo.com/russia-why-63-important-number-days-233355257--abc-news-topstories.html

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #20 on: December 12, 2014, 09:30:46 PM »
My apologies, and my sincerest apologies again.

I need to redact and correct my above statements, I got the saudi arabian and russia prices backwards.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB4QFjAA&url=http%3A%2F%2Fwww.petrofinder.com%2Fdealgate%2Fdown_load_deal.php%3Fdeal_no%3D258&ei=I6mLVMTZDom1sQT2lIGgDg&usg=AFQjCNFd8bhGROxwcVOmT3yfkWtgAQLScQ&sig2=roz9NcjrYXqNNRk1DV2xlQ&bvm=bv.81828268,d.cWc

That will take you to petrofinder, which will give you the prices of oil production for saudia arabia and russia.

The prices state 2-5 for saudi, and 10-15 for russia.

Please see near the top of page 2.

http://www.bloomberg.com/news/2014-12-12/iea-cuts-global-oil-demand-forecast-for-4th-time-in-five-months.html

http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-independence-by-2035-on-shale-boom-iea-says.html


OO damn, I posted that inside a qoute by accident.

Sorry about that bwall. There is the links and information you asked for.

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #21 on: December 12, 2014, 09:38:18 PM »
I think that Fallenour is just trolling us all. Also, I think that Fallenour learned Russian before he learned English. As they said in ancient Rome about the internet: Caveat Emptor.

This is one of many links available that all say how screwed Russia is with a low oil price and sanctions:

http://news.yahoo.com/russia-why-63-important-number-days-233355257--abc-news-topstories.html

Please dont tell me you get your news from yahoo. Yahoo has been full of shit, and excessively democratically biased for ages.

http://www.tradingeconomics.com/russia/government-debt-to-gdp

Thats the GDP of russia currently, 13.4.

If you think they can default on a 13.4 GDP, your crazy.

But let me alleviate your woes even further.

http://www.washingtontimes.com/news/2014/nov/18/van-ness-russia-china-preparing-eliminate-our-rese/

now combine that with this.

http://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

I think russia have MORE than enough to pay off all the debts.

Russia and china are aiming at dumping US currency. Thats what they want, and forcing them to pay their bills in it, well that just gives them an excuse to dump it. It also gives them an excuse to dump it without causing a major market scare on US currency immediately, and costing china billions while it tries to slowly drop its US currency reserves and treasury notes that its amassed (over 4 trillion of it), by buying up massive amounts of assets, such as gold mining companies.

Am I the only one piecing all this together?


waltworks

  • Magnum Stache
  • ******
  • Posts: 3216
Re: Ruble vs Dollar Investing
« Reply #22 on: December 12, 2014, 11:47:08 PM »
The world is mighty unpredictable, and that's great if you love to gamble (or pontificate endlessly on your favorite narrative about oil/russia/etc). OP: get dollars. Use them to buy index funds of some sort, even if you have to send money to your family in the US in a sock or something to do it.

-W

Cid47

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Ruble vs Dollar Investing
« Reply #23 on: December 14, 2014, 04:09:52 AM »
Thanks to everybody for their input. I didn't realize that I would be opening such a can of worms with my question)))

I certainly understand that investing in dollars is the safer way to go, I just got a little starry-eyed at the thought of getting back 14% on my money.

I also do think that the ruble will eventually go up again as it's intrinsically linked with the price of oil, which, in my opinion, can't stay down forever. My biggest worry is the ruble defaulting before that happens.

You guys have given me some good points to think about, so thanks again.

KingCoin

  • Pencil Stache
  • ****
  • Posts: 783
  • Location: Manhattan
  • Achieved FI @ 30
Re: Ruble vs Dollar Investing
« Reply #24 on: December 14, 2014, 01:49:47 PM »
I'd not only buy dollars, but get them to the United States ASAP.

Capital controls and/or forced conversions may be around the corner. There's a reason why the USD interest rate is so much higher in Russia than in the US. People know that dollars in Russia may never be able to leave.

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #25 on: December 15, 2014, 03:56:08 PM »
The ruble fell off a cliff today (Monday) and is now 64 to the dollar.  Russia has hiked interest rates today from 10.5% to 17%!!!

Yikes.

gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: Ruble vs Dollar Investing
« Reply #26 on: December 15, 2014, 05:04:52 PM »
So... say I want to throw $500 into russian government bonds for that tasty, tasty 17%, and $500 is a gamble I won't cry about losing. Preferably done through vanguard. What do?

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #27 on: December 15, 2014, 05:21:05 PM »
So... say I want to throw $500 into russian government bonds for that tasty, tasty 17%, and $500 is a gamble I won't cry about losing. Preferably done through vanguard. What do?

Step 1:  Get a match...

gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: Ruble vs Dollar Investing
« Reply #28 on: December 15, 2014, 06:09:21 PM »
Eh, I prefer better gambles than matches. But thanks.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #29 on: December 15, 2014, 06:13:15 PM »
So... say I want to throw $500 into russian government bonds for that tasty, tasty 17%, and $500 is a gamble I won't cry about losing. Preferably done through vanguard. What do?

Just take the $500, buy a carful of groceries and give them to the first homeless person you find. The end result will be the same, but at least you'll be helping someone who is desperately in need. Besides, it's Christmas!

Let me explain: By raising the interest rate from 9.5% to 10.5% last week, nothing happened to support the ruble. By raising it to 17% today, the Russian Central Bank has achieved two things:
1) Trying to attract enough capital from abroad to stem the slide in the ruble. Will it be successful? Time will tell. 
2) Raising the cost of borrowing so high, that it will cut off ALL lending and send the economy into a tailspin. This is 100% guaranteed.

The big question is which of those two scenarios will happen first? Can the RCB attract enough capital from abroad to stem the capital flight and halt the falling ruble BEFORE running the economy off the cliff? An elaborate game of chicken, if you will. Putin knows his citizens can take pain (historical examples: Leningrad & Stalingrad) and so he's banking on that.

Historically, central banks have shown themselves unable to raise the interest rates high enough to stop a run on the currency. Sweden raised their overnight rate to 27% (IIRC) in 1992 before capitulating. Same thing for the UK; overnight rate of like 20% before capitulating. So, from that perspective, the rates have to go higher still and the ruble needs to find it's natural bottom before stabilizing.

The ruble dropped 10% today, so that means it's nowhere close to being done. If you invested with a 14% rate of return as the OP asked, you would have lost 10% of that interest rate (14%) today. With 364 days left for the ruble to continue dropping and at best a 4% rate of return. I think by the end of the week it will be at 70, which would be well over 14% for the week thus wiping out all the gains for the entire year with another 51 weeks of falling ruble before you can access your funds again.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #30 on: December 15, 2014, 06:17:21 PM »
Just in case the OP is still reading: it's not too late to get out of rubles and into USD (or EUR) even at 65. It's going to get a lot worse before it gets better. (See my first post about what has to happen before the ruble stops falling)

If you change into USD now at 65 you will be able to get much more than that in 6 months time.

gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: Ruble vs Dollar Investing
« Reply #31 on: December 15, 2014, 06:59:27 PM »
Hum. For some dumb-ass reason, I didn't think about it - obviously the return isn't in dollars. D'oh. Fuck that, nevermind.

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Ruble vs Dollar Investing
« Reply #32 on: December 16, 2014, 05:24:30 AM »
The ruble will be down for a while guys.

I was betting on it and several currencies, but OPEC (mostly the saudis in a power play to break Shale Oil in the states) openly annouced via their Energy Minister they have every intention of driving the market down, and that they have absolutely no intentions of letting it recover until at least jun 5.

Ruble hit new low of 1:73.

17% Interest though? Ill buy treasuries for sure.

Rubles? Well...I was buying for the long game, so it was a great buy for me.

It's going to be a while before the ruble recovers, but it inevitably will.

If you are into long game purchases, it REAAAALLY cant get much lower than this LOL

Definitely not going to make the increase by my projected date however, not to the dollar increase I wanted to see.

*munch munch munch*

Mmmmm...crow...not as good as camel or kangaroo...but still good.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3216
Re: Ruble vs Dollar Investing
« Reply #33 on: December 16, 2014, 08:08:44 AM »
This thread is comedy gold.

-W

gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: Ruble vs Dollar Investing
« Reply #34 on: December 16, 2014, 10:43:44 AM »
Welp, thanks for saving me from myself yesterday, guys. I've learned my lesson.

Zamboni

  • Handlebar Stache
  • *****
  • Posts: 2256
Re: Ruble vs Dollar Investing
« Reply #35 on: December 16, 2014, 11:04:39 AM »
I agree, W, one of the best I've read in some time.

-Z

dungoofed

  • Pencil Stache
  • ****
  • Posts: 661
Re: Ruble vs Dollar Investing
« Reply #36 on: December 16, 2014, 03:04:05 PM »
Just to play devil's advocate, the ruble has a few things going for it when compared to the USD. For starters it is backed by gold to a degree (USD is not backed by gold). And the RCB has a capital reserve rate of 12%, as opposed to that of the Feb which is something like 1-2% these days.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3216
Re: Ruble vs Dollar Investing
« Reply #37 on: December 16, 2014, 03:32:27 PM »
Yup, and the $ is backed by the most dynamic and creative economy in the history of mankind. Gold, schmold. I'll take the 13 year old Lego League kid who's going to perfect growing organs in the lab someday.

-W

mxt0133

  • Handlebar Stache
  • *****
  • Posts: 1559
  • Location: San Francisco
Re: Ruble vs Dollar Investing
« Reply #38 on: December 16, 2014, 03:54:42 PM »
@Cid47 how is inflation right now?  Can you give us numbers of staples like bread, milk, ect vs a few weeks ago?

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #39 on: December 16, 2014, 04:09:39 PM »
@Cid47 how is inflation right now?  Can you give us numbers of staples like bread, milk, ect vs a few weeks ago?

Curious about this too.  Also what really is in demand.   Bread?  Vodka?  Toilet paper?

mxt0133

  • Handlebar Stache
  • *****
  • Posts: 1559
  • Location: San Francisco
Re: Ruble vs Dollar Investing
« Reply #40 on: December 16, 2014, 04:17:06 PM »
I know Iphone will be Apple just stop selling them on their on-line store.

Chuck

  • Bristles
  • ***
  • Posts: 403
  • Age: 31
  • Location: Northern VA
Re: Ruble vs Dollar Investing
« Reply #41 on: December 16, 2014, 05:53:02 PM »
Just to play devil's advocate, the ruble has a few things going for it when compared to the USD. For starters it is backed by gold to a degree (USD is not backed by gold). And the RCB has a capital reserve rate of 12%, as opposed to that of the Feb which is something like 1-2% these days.
This collapse is indicative of why gold is such a pointless investment.

How much did gold shelter the Ruble from it's 20% devaluation over the last 48 hours?

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #42 on: December 16, 2014, 05:58:12 PM »
Just to play devil's advocate, the ruble has a few things going for it when compared to the USD. For starters it is backed by gold to a degree (USD is not backed by gold). And the RCB has a capital reserve rate of 12%, as opposed to that of the Feb which is something like 1-2% these days.
This collapse is indicative of why gold is such a pointless investment.

How much did gold shelter the Ruble from it's 20% devaluation over the last 48 hours?

You do not understand gold.

Gold is an excellent, portable means of holding your buying power.

Answer me this?  What was gold in terms of rubles per ounce at the start of the year and what do you think gold is per ounce in rubles now?

KingCoin

  • Pencil Stache
  • ****
  • Posts: 783
  • Location: Manhattan
  • Achieved FI @ 30
Re: Ruble vs Dollar Investing
« Reply #43 on: December 16, 2014, 07:20:35 PM »
The ruble will be down for a while guys.

I was betting on it and several currencies, but OPEC (mostly the saudis in a power play to break Shale Oil in the states) openly annouced via their Energy Minister they have every intention of driving the market down, and that they have absolutely no intentions of letting it recover until at least jun 5.

Ruble hit new low of 1:73.

17% Interest though? Ill buy treasuries for sure.

Rubles? Well...I was buying for the long game, so it was a great buy for me.

It's going to be a while before the ruble recovers, but it inevitably will.

If you are into long game purchases, it REAAAALLY cant get much lower than this LOL

Definitely not going to make the increase by my projected date however, not to the dollar increase I wanted to see.

*munch munch munch*

Mmmmm...crow...not as good as camel or kangaroo...but still good.

Does 17% interest really look good when the Ruble has lost 30% of it's value in one week?

Also, it's important to realize that currencies aren't a mean reverting asset. In can in fact get much, much worse (LOL). Countless currencies have become worthless, or near worthless after years of high inflation and/or political turmoil. The notion that you can just close your eyes, hold your nose, grab your balls, and all will be will in a couple years simply isn't true.

I'll reiterate that the OP should get his USD out of Russia ASAP.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #44 on: December 17, 2014, 09:46:23 AM »

Gold is an excellent, portable means of holding your buying power.


Not too portable above, say, 20-30 pounds. How much are you allowed carry on an airplane? How much can you carry in a suitcase? So, you're only good for up to half a million. If you want to move more than that, you're screwed. Time to buy diamonds or artwork. Good luck not getting screwed when you buy those, though.

TomTX

  • Magnum Stache
  • ******
  • Posts: 3352
  • Location: Texas
Re: Ruble vs Dollar Investing
« Reply #45 on: December 17, 2014, 11:17:12 AM »
The ruble will be down for a while guys.

I was betting on it and several currencies, but OPEC (mostly the saudis in a power play to break Shale Oil in the states) openly annouced via their Energy Minister they have every intention of driving the market down, and that they have absolutely no intentions of letting it recover until at least jun 5.

Ruble hit new low of 1:73.

17% Interest though? Ill buy treasuries for sure.

Rubles? Well...I was buying for the long game, so it was a great buy for me.

It's going to be a while before the ruble recovers, but it inevitably will.

Long game, huh?

So you're claiming you haven't gotten a margin call on your 200:1 leverage?

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 1693
Re: Ruble vs Dollar Investing
« Reply #46 on: December 17, 2014, 02:43:18 PM »
Not too portable above, say, 20-30 pounds. How much are you allowed carry on an airplane? How much can you carry in a suitcase? So, you're only good for up to half a million. If you want to move more than that, you're screwed. Time to buy diamonds or artwork. Good luck not getting screwed when you buy those, though.

20 pounds of gold, or about 300 ounces would be $360,000 US at recent prices.   I can carry 20 pounds on my person, heck I do that during the holidays after thanksgiving dinner.

I have read on the news that sales of luxury cars in Russia are up 50% as the rich try anything to get their money out of the ruble and into something that doesn't drop 10% per day.   The middle class has turned to IKEA furniture as a store of value.

20 pounds of gold would store a lot of rubles.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: Ruble vs Dollar Investing
« Reply #47 on: December 17, 2014, 02:46:09 PM »

Gold is an excellent, portable means of holding your buying power.


Not too portable above, say, 20-30 pounds. How much are you allowed carry on an airplane? How much can you carry in a suitcase? So, you're only good for up to half a million. If you want to move more than that, you're screwed. Time to buy diamonds or artwork. Good luck not getting screwed when you buy those, though.

Yeah jewels are a much better way to physically transfer wealth across borders. You can store A LOT of $$$ with just a few stones in your shoes. That's how the Europeans did it while running away from the Nazi's.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: Ruble vs Dollar Investing
« Reply #48 on: December 17, 2014, 02:52:46 PM »
Remember folks that Russia defaulted on it's debt in '98, they aren't afraid to screw everyone.

If you see George Soros buying Russian stocks/bonds/currency/whatever, then yeah maybe you divert some throwaway money into the same exact trade he's doing with his equivalent amount of risk. Otherwise, let everyone else find out the hard way just how low something can go...including $0.

bwall

  • Pencil Stache
  • ****
  • Posts: 523
Re: Ruble vs Dollar Investing
« Reply #49 on: December 17, 2014, 03:48:15 PM »

Yeah jewels are a much better way to physically transfer wealth across borders. You can store A LOT of $$$ with just a few stones in your shoes. That's how the Europeans did it while running away from the Nazi's.

You can also get screwed quite easily buying shiny glass. Who can tell the difference between $1m in stones and $10,000 in glass? I know I can't and I doubt that I would ever acquire the capacity. I also know that in such stressful times the incentive to sell worthless glass is quite high, punishment almost nonexistent. Who is going to report their attempt to circumvent capital controls to the authorities?