- The Wash, Rinse, and repeat cycle has moved on now…
- Frank Trotter gives us his final installment….
Good Day, and a Fantastico Friday to one and all! This is a special Friday edition of the Pfennig, not normal one, as it’s the final installment of Frank Trotter’s article on Currency Diversification and other things. That’s all that’s here today, besides a currency roundup, so don’t think that Chuck is ready to write again on Fridays! NO WAY! I can’t thank Frank enough for doing this for me and you… Today, he even mentions little old me! Thank you, Frank!
For What It’s Worth… This is the final installment of Frank Trotter’s Currency Article title: What’s On The Other Side? A Serious Look At Currency Investing… And can be found in its entirety here: https://battlebank.com/battle-bulletin/whats-on-the-other-side-of-every-trade-a-serious-look-at-currency-investing/?refid=10002
We pick this up with his discussion of currencies we should look to with Kiwi being on the fence… here’s Frank:
A Word About the Kiwi
New Zealand’s dollar is routinely comingled with the commodity currency bloc, filed alongside the Aussie and the loonie as if the three were interchangeable. The grouping is correct as far as it goes but misleading past that point. The kiwi is genuinely commodity linked: Dairy, meat and horticulture dominate exports, dairy auction prices move the currency, and China’s appetite sets the tone as New Zealand’s largest trading partner. But the kiwi’s commodities are soft, not hard. New Zealand sells protein and produce, not energy and metals, so it participates only partially in the hard-asset cycles that drive the loonie and the Aussie. Add a chronically deficit-prone current account, a small and shallow float, and a central bank with a history of aggressive swings, and the kiwi becomes the most fragile member of the family.
The year 2025 demonstrated the distinction. While the Aussie gained against a falling dollar, the kiwi actually lost ground, sinking a bit as the Reserve Bank of New Zealand slashed its cash rate to 2.25% in response to a shrinking economy, a second-quarter GDP contraction of 0.9% and unemployment at a five-year high. Two commodity currencies, one dollar bear market, opposite outcomes. The lesson is that the commodity label is a necessary screen, not a sufficient one. The fiscal, monetary and external filters still have to be applied, and on those filters New Zealand currently fails where Australia passes.
Gold: The Currency Without a Central Bank
No serious discussion of currencies can end with paper. Gold is the one money in the system that no committee can print, and its price is best understood not as a commodity quote but as the inverse of confidence in the entire fiat complex. With that reading, the recent message is unambiguous. Gold surged roughly 65% in 2025, its largest annual gain in over four decades, and by mid-2026 it traded above $4,100 per ounce. Central banks, the same reserve managers that absorbed the 2022 lesson about the political conditionality of dollar assets, bought at elevated rates for a third consecutive year.
What the Commentators Are Saying
The independent financial analyst world saw all this earlier than Wall Street did, which is worth acknowledging even while discounting the theatrics. Chuck Butler deserves first mention because he’s been making the currency diversification case longer than almost anyone in American finance. His Daily Pfennig letter, still publishing today, has hammered a single theme since at least 2005: Deficits do matter, and never in history has one country owed so much to the rest of the world without a currency crisis.
Jeff Opdyke, the former Wall Street Journal writer now publishing from Portugal, has argued for years that Americans should hold foreign accounts and currencies. He warned of the dollar’s diminution as BRICS nations assemble alternatives and claims vindication in the 2025 decline.
Doug Casey remains the maximalist: To him, every fiat currency is an IOU nothing — the dollar most dangerously so given its numeraire status. His prescription is to exit into precious metals rather than rotate among papers.
Grant Williams offers the historically grounded frame, tracing an 80-year arc from Bretton Woods and arguing that reserve currencies fade through redirection rather than collapse, with the 2022 reserve freeze as the Suez moment that taught central banks the dollar carries political risk.
Alexander Green and the Oxford Club strategists occupy the moderate wing, advocating global diversification across asset classes within conventional portfolios rather than using it as an escape from them.
And the mainstream has now converged partway toward all of these views. J.P. Morgan’s private bank tells clients the dollar’s risks skew downward and recommends revisiting currency allocations. Morningstar calls the dollar still overvalued despite the 2025 decline and points to non-U.S. assets for value and currency appreciation potential. Morgan Stanley has floated another 10% of dollar downside by the end of 2026. When the contrarians and the wire houses agree on direction and argue only about magnitude, the sensible conclusion is not panic. It is allocation.
The Opportunity
Currency investing done properly, like a lot of our daily chores, is unexciting. Confine yourself to the major floating currencies. Expect currency-like returns, not equity-like returns, and understand that in the occasional year the two will rhyme. Judge currencies on relative money growth, relative inflation, relative deficits and debt, credit standing, float and rate differentials — weighed together — and apply those filters even inside the commodity bloc, where the kiwi and the loonie show that geology alone is not enough. Favor the monies of commodity producers and fiscal adults: the krone, the Aussie, the franc and the euro as the liquid counterweight to the dollar. Keep gold as the anchor beneath the whole structure, the one currency that answers to no finance ministry. And above all, stop mistaking a 100% dollar portfolio for a neutral position. There is no neutral position. There is only the currency risk you chose and the currency risk you never noticed you were taking. – Frank Trotter
Chuck again… Well, that’s the end of one of the best pieces on Currencies that I’ve read and I’m very elated to be able to share it with Pfennig Readers… I used to travel with Frank to do Conferences, and I when would introduce him I would say: “Frank and I have worked so long together that when we started the Dead Sea wasn’t even sick yet!”
OK, here’s the currency roundup for today, and I’ll see you here again on Wednesday next week, as Monday is a Holiday in my eye, and Tuesday I go to see the Dr that will perform the Mohs surgery on my cancer spot… So, take this one in and then we’re on sabbatical until Wednesday next week!
Currencies 9/3/2026: American Style: A$ .7207, kiwi .5888, C$ .7247, euro 1.1625, sterling 1.3530, Swiss $1.2367, European Style: rand 15.9469, krone 9.2928, SEK 9.5491, forint 312.15, zloty 3.7123, koruna 20.5076, RUB 86.54, yen 156.15, sing 1.2668, HKD 7.8403, INR 94.49, China 6.7085, peso 16.89, BRL 5.1130, BBDXY 1,190, Dollar Index 99.01, Oil $90.01, 10-year 4.76%, Silver $67.29, Platinum $1,819.00, Palladium $1,433.00, Copper $6.66, and Gold… $4,473
The times have changed for this phase of the SPTs Wash, Rinse and Repeat cycle, where they short the metals so much that the return is baked into their trades… They then begin to amass the metals driving them up exponentially till the metals are at a price that makes sense for the SPTs to short them again… And thus, here we go around and around again… But I want to empathize that each time the metals rebound they go to a level higher than they were when the short selling began… So, that is why you buy Gold/Silver and forget about them!
That’s it for today… and this week… My beloved Mizzou Tigers came out of the gates roaring last night, and won their game 54-14… I was outside watching it and every time the Tigers scored, I would turn my Turtle Box speaker on and blast the Mizzou Fight Song… I’m sure my new neighbors were wondering what the heck Chuck was doing now… The Cardinals blew the chance to sweep the Mighty Dodgers last night, blowing the lead in the bottom of the ninth… UGH! Wild Cherry takes us to the Finish Line today with their song: Play That Funky Music… HEY! This is a fun song to bring back memories of when you first heard this song! I hope you have a Fantastico Friday today, and a very safe but fun Labor Day Holiday this weekend. Please Be Good To Yourself!
Chuck Butler