NEW YORK ( ETF Expert) -- The Federal Reserve, as expected, announced its decision to stay on its ultra-accommodative course; that is, it will continue to print $85 billion each month to buy U.S. debt and to suppress intermediate-term interest rates.However, the central bank's rationale for avoiding the choice to taper its bond buying may not sit well with critics of quantitative easing (QE). Many maintain that the electronic creation of U.S. dollars is leading to a probable collapse in the currency. In truth, the Dollar Index is roughly in the same spot as it enjoyed back in January 2005. Long before zero-percent-interest rate policy, way before Bernanke's Fed began printing dollars to purchase U.S. Treasuries in December 2008, the Dollar Index registered a price of $80. That's nearly nine years of trading against different currencies of the world without a definitive longer-term trend of depreciation. Perhaps ironically, the real decline in the greenback occurred between the start of 2002 and the end of 2004. The USD Index fell 33% over those three years alone. Meanwhile, foreign stocks making up the iShares MSCI EAFE Index ( EFA) gained 40% while the S&P 500 picked up only 10%; most of the gain differential is attributable to the currency effect. And gold? The yellow metal via iShares Gold Trust ( IAU) gained 57%, in the three-year period (2002-2004).
The only other currency ETF that I like for safe harboring is the Swiss Franc ( FXF). It definitely came in handy during the double-threat in 2011 (i.e., U.S. debt downgrade and euro-zone debt crisis). On the other hand, the Bank of Switzerland did not sit idly by as its own franc soared through the proverbial roof. In order to keep its own economy stable, the National Bank of Switzerland printed francs by the "jillions" to ensure a peg of sorts. In other words, neither FXF or CYB are likely to make you rich.
Courtesy of StockCharts.com Of course, commodities tend to come to the forefront whenever one discusses dollar devaluation. Yet the gains that might be expected in a world where developing countries pick up the economic slack for the developed countries ( e.g. 2002-2004) are not the gains that may be counted on today (i.e., 2012-2014). Strangely enough, to the extent that emerging economies have been unable to export their wares, the less demand many of them have had for natural resources and related hard assets. It follows that commodity ETFs/ETNs as well as precious metals have not sheltered investors the way they have in the past. On the flip side, a solid defense may still be achieved through diversifying into commodity intensive countries like Russia. Market Vectors Russia ( RSX) has a trailing P/E of 10, which is 30% cheaper than the S&P 500 SPDR Trust ( SPY). RSX yields 2.6% to SPY's 2.0%. The price-to-sales ratio for RSX is roughly 0.5 whereas SPY is closer to 1.5. Equally critical, nearly three-fifth of the portfolio is dedicated to energy and basic materials. Recently, RSX experienced a "golden cross," where its 50-day trendline crossed above its 200-day trendline. Courtesy of StockCharts.com Follow @etfexpert This article was written by an independent contributor, separate from TheStreet's regular news coverage.