US Dollar

Expert advice: Sell American dollars. Buy gold, art and jewelry

by Lee on July 18, 2011 17:33 pm · 1 comment

Some critics say we’re like the Joe Bfstplk character in the old L’il Abner comic strip. Joe walked around with his own personal dark cloud hanging over his head.

We defend ourselves by saying, “You don’t understand. It’s probably worse than we than we think and we think it’s pretty damn bad.” Now it appears that a big-time Wall Street mover and shaker is singing our song:

There may be another round of quantitative easing in the U.S. and Europe remains volatile. What’s an investor to do? Get into gold, art and jewelry, Scott Minerd, chief strategist at Guggenheim Partners, told CNBC Wednesday.

“We’re in a ‘beggar thy neighbor’ era. Paper money is garbage at the end,” he said. “It’s a matter of relative values, about which garbage do you own.”
There’s gold, of course, but “I don’t want to get labeled as a gold bug,” Minerd said. “I’m in favor of any asset class which is a store of value, which gets you away from currency risks,” and that would include art, collectibles and diamonds. Over his long-term horizon, “all of these noncurrency-related assets are probably superior investments than looking at financial assets.”

Watch the entire interview. When Wall Streeters begin agreeing with the doom and gloomers at EconomicCollapse.net, it’s a sure sign that the apocolypse is nigh.


Source: CNBC

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Which currencies outperformed gold in the first half of 2011?

by Lee on July 13, 2011 13:01 pm · 2 comments

Let’s start off by stating the obvious: The United States dollar will not be found on this list. It’s performance could be described in uniquely American terminology – it’s lower than a snake’s belly in a wagon rut.

On the other hand, GoldSilver.com put together a very interesting list of currencies that outperformed gold in the first half of 2011. This is, of course, no indication that they’ll continue to outperform the precious metal, but still, it’s an interesting exercise.

Imagine the look of horror that would have crossed your face is your investment advisor has six months ago recommended a mix of Moroccan Dirhams, Albanian Lekes, Mauritian Rupees, CFP Francs and Hungarian Florints.

Here’s the list of currencies that out-appreciated gold.

[click to continue…]

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What happens to your portfolio when the greenback goes belly up?

by Lee on July 6, 2011 2:00 am · Comments/Link

A group of financial gurus (a term that should always be accompanied by warning lights and buzzers) gathered for a recent conference sponsored by EverBank.

They doled out advice for surviving the collapse of the dollar. We thought you might appreciate hearing what the “gurus” are doing with their own money.

Frank Trotter of EverBank Direct predicts that the U.S. dollar “will see a significant decline in the next 5-10 years.” He recommends diversifying into foreign currencies and his five favorites are the Swedish krona, the Norwegian krone, the Australian and Canadian dollars the Brazilian real.

Next up was Eric Roseman of Commodity Trend Alert. He looks into his economic crystal ball and sees a food crisis within three to five years. On top of that, he foresees billions of Chinese citizens who are able to afford more food and predicts that China will become a net ag importer, which will add to price pressures around the world. His investment recommendation: JJG, the exchange-traded note for grains.

[Click to read what the other experts say...]

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An interview with Dr. Doom: Marc Faber talks about why the dollar is finished and other interesting subjects

by Lee on July 2, 2011 1:00 am · 3 comments

Dr. Marc Faber is known as Dr. Doom because, unfortunately, he’s a contrarian whose dark forecasts have been right on the money. He publishes a pithy monthly investment newsletter called The Gloom, Boom & Doom Report.

Here are five questions and answers we plucked from a recent interview with the Daily Bell:

Question #1:

Daily Bell: Do you still expect hyperinflation?
Marc Faber: In my view, the debt level, especially in the US, if we include the unfunded liabilities of Medicare, Medicaid, Social Security and these entitlement programs, is beyond repair. And this will necessitate printing more money. Also, in my view, there is no real political will to address the issues, because who ever would cut entitlements, will not be re-elected. So we have a tyranny of the masses.

[Read the other 4 interesting questions and answers...]

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How to survive and thrive when the U.S. dollar collapses

by Lee on June 27, 2011 1:00 am · Comments/Link

Chuck Butler, President of Everbank World Markets, spoke at his company’s Global Currency Expo last month. We were both impressed and depressed by his remarks, but that’s just us.

The pound sterling was the world’s reserve currency until World War II. That’s when “we became the reserve currency by financing England because they couldn’t pay their debts and had diluted their currency…” Butler said. They needed assistance from other countries to service their debt and had overextended their military.”

It doesn’t take a currency wizard to note the eerie parallels in today’s world.

China started signing swap agreements in 2009. They’ve already done deals with much of Asia, the European Union, Canada, Russia, Brazil, Belarus and Argentina. Japan and Korea are coming on board soon. Rumor has it that they’re in negotiations with the oil-producing Arab nations.

What does this mean for the United States dollar. Nothing good. “The U.S. dollar will lose its reserve currency status sometime between 2014 and 2020,” Butler said. “There will be no trumpet; it will just happen.”

He thinks it’s inevitable that the dollar will lose its reserve status. So how do you protect your portfolio from the inevitable? According to Butler, “94% of investment return is based on the asset-class selection, and a low covariance with other assets.” Translation: Diversify out of U.S. dollars. “You wouldn’t buy just one stock,” Butler said, “so why would you own just one currency?”

He recommends the renminbi, the Singapore dollar, the Norwegian krone, and the Swedish krona.

We like the way he thinks.

Source: Lew Rockwell

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Grim gets grimmer: Dollar index hits one-month low, China warns on U.S. assets

by Lee on June 8, 2011 2:00 am · Comments/Link

Gravity seems to be exerting is inexorable force on the U.S. currency. What once went up is now reaching new lows.

The dollar fell to a one-month low against a basket of currencies on Tuesday and a record low against the Swiss franc after a Chinese official said the greenback would continue to weaken versus other major currencies.

Remember that old Chubby Checker record from the early 60s called Limbo Rock? One of it’s lyrics asked the musical question, “How low can you go?”

The dollar index fell to a low of 73.601, the lowest since May 5, while the greenback fell to 0.8328 Swiss francs on trading platform EBS a record low.

“China has been growing its share of U.S. securities quite aggressively in the past, and the threat that they will be selling these holdings has always been there,” said Adam Myers, senior forex strategist at Credit Agricole.

“But this is not a credible threat as a sell-off will lead to a steepening of the U.S. yield curve which will hurt the U.S. and the Chinese, who are dependent on the U.S. economy. But I do agree that the dollar is headed lower in the long term.”

The Chinese and American economies are like Siamese twins who don’t get along. They’d really like to be separated, but they both know they can’t survive the drastic surgery the separation would require.

So to quote Mr. Checker, how low can we go?

Source: CNBC

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Is the U.S. dollar is even shakier than the Euro?

by Lee on May 16, 2011 6:57 am · Comments/Link

We’ve been assured by all the talking heads that the Euro is the world’s sickest currency. “The dollar’s weak,” they tell us, “but that Euro, why, it’s ready to totally disintegrate.”

Axel Merk is president and chief investment officer of Merk Investments and he says that point of view is nonsense, exactly 180 degrees out of phase.

We have to admit that Merk makes a certain amount of sense:

[Click to hear what Axel Merk has to say...]

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Irony at it’s Best: It Costs 50% More to Make a Dollar Now Than It Did 3 Years Ago, but Fed Insists There is No Inflation

by Mark on March 26, 2011 13:58 pm · Comments/Link

While the Federal Reserve insists there is no inflation, the cost to create a dollar bill as risen 50% in the last three years, due to the rising cost of cotton and linen. Printing the dollar has become so expensive now, the government is considering switching the dollar from paper to coin. Listen to Peter Schiff tell the ironic story.

H/T: Libertarian News

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The Day the Dollar Died

by Mark on November 24, 2010 16:02 pm · Comments/Link

We talk about the demise of the dollar, but what could the deciding day, when the U.S. Dollar falls out of bed, actually be like? Well, sit back and watch this fictional account of what the first twelve hours of a dollar collapse could resemble, set on December 19, 2012 as the markets await the Fed’s announcement on QE4.

Hint: It’s not going to be a good day.

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Ireland’s Eventual Default will be Quite Contagious

by Mark on November 23, 2010 15:12 pm · Comments/Link

Ireland’s debt problems are not going to be contained by its borders, or even to the PIGS nations. The banks in France, Germany and particularly the United Kingdom have made large loans to Ireland, and when they default — not if, but when, says former IMF Executive Desmond Lachman — these banks will suffer huge losses.

Bank problems at the core of Europe would be bad for the Euro and good for the U.S. Dollar. And this is bad for American exports. And these exports that benefit from a weak dollar is what the U.S. stock market has largely been pinning its hopes on. And beyond this, of course, the U.S. financial system is part of the global financial system, and as we saw two years ago, everything is interconnected. If they go down hard, the U.S. will feel it.

http://www.youtube.com/watch?v=tTBU3AsZwC4

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“Fed’s QE2 is in alignment with George Soros’s agenda to destroy global capitalism.”

by Mark on November 10, 2010 9:31 am · Comments/Link

George SorosAny non-Koolaid drinking American who is paying attention, knows that socialist, anti-American George Soros is out to destroy capitalism, and capitalism’s headquarters, the United States. Financier of many worldwide far left, socialist and marxist groups, he’s extremely busy with his hands in suspect organizations around the world.

Here’s what The Wizards of Wall Street author, Zubi Diamond, has to say about Soros and the Fed’s Quantitative Easing program, as written up in Fox News:

Another financial expert is expressing his deep disgust with the Federal Reserve’s decision to print more money and buy more U.S. debt, saying it is a sign that the U.S. capitalist system is moving closer to collapse.

“This is the type of stuff we accused the communist and socialist governments of doing—interfering in free markets through currency manipulation,” declared Zubi Diamond, author of The Wizards of Wall Street. “What the Fed is doing is not good for free market capitalism and it is not good for America.”

In an interview with Accuracy in Media, Diamond went on to say, “The Fed is following the economic models of Third World countries by printing more money and devaluing their currencies. If you keep doing what Third World economies do, eventually you will become a Third World economy.”

The Fed’s new action, labeled “quantitative easing” or QE2, follows a first attempt at “QE,” known as QE1. QE means that the Federal Reserve is printing more money and buying more government debt. In total, according to Investor’s Business Daily, “the Fed will have created $2.5 trillion out of the blue.”

Diamond said the result of the Fed’s policy will be to “increase the debt, devalue our currency and create a bigger problem that won’t solve the crisis.” Eventually, America could “collapse under its own weight of massive debt,” he warned.

The QE2 “will devalue the dollar and lead to higher commodity prices, asset and price inflation. It may even lead to the end of the U.S. dollar as the world reserve currency,” Diamond predicted. He noted that Obama Treasury Secretary Timothy Geithner floated the idea of the dollar losing its status as the world’s reserve currency, “only to backpedal from it when it raised some eyebrows.”

“What is most troubling to me about this,” Diamond added, “is that the Fed’s QE2 is in alignment with George Soros’s agenda to destroy global capitalism.” The decline of the dollar “is what George Soros wants and what he has proposed in the past,” he noted.

Soros, the billionaire hedge fund operator who finances various leftist and Marxist groups, including Media Matters, has made his fortune by betting on the collapse of national economies and currencies. He was convicted of insider trading in France.

Source: Fox News

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China Central Bank: “absurd” that the dollar remains a reserve currency

by Mark on November 9, 2010 7:26 am · Comments/Link

earth americaChina Central Bank’s advisor Li Daokui has a good point, and we don’t think he’s the only one thinking this. Forget history, and simply take a look at the current (and future) condition of the once fiscally responsible United States of America and tell me if you would pick the U.S. Dollar to be the world’s reserve currency. Of course you wouldn’t.

Daokui illustrates this point by asking, if you were a visitor from outer space, what would you make of this?

From Bloomberg:

Li Daokui, an academic adviser to China’s central bank, said it could be seen as “absurd” that the dollar remains a reserve currency after the financial crisis.

To a visitor from outer space, it would seem “absurd” that the dollar holds that role, given problems in U.S. financial regulation and the country’s economic difficulties, Li said at a forum in Beijing. The same assessment could be made of the nation’s ability to keep issuing currency according to its own needs, he said.

Just how much longer will the United States be able to maintain its stature in the world?

Source: Bloomberg

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Understanding QE2 — and what could go wrong

by Mark on November 3, 2010 7:06 am · 5 comments

qe2 - quantitative easingThe fed is about to announce the size of their quantitative easing efforts. And it comes with great risk. I get asked a lot just what is QE2, and today I ran across an article that explains it very well in plain, layman’s language. Pass it along to any of your friends who need a clear understanding of what quantitative easing is, and what could go wrong with this desperate attempt to keep us from fiscal ruin.

The Federal Reserve is about to take a huge risk in hopes of getting the economy steaming along again. Nobody is sure it will work, and it may actually do damage.

The Fed is expected to announced today that it will buy $500 billion to $1 trillion in government debt, and drive already low long-term interest rates even lower. The central bank would buy the debt in chunks of $100 billion a month, probably starting immediately.

Economists call it “quantitative easing.” It gets the name “QE2″ — like the ship — because this would be the second round. The Fed spent about $1.7 trillion from 2008 to earlier this year to take bonds off the hands of banks and stabilize them.

Here’s how it’s supposed to work this time: The Fed buys Treasury bonds from banks, providing them cash to lend to customers. Buying so many bonds also lowers interest rates because demand for Treasurys leads to higher prices and lower yields. Interest rates are linked to yields. Lower rates encourage people to borrow money for a mortgage or another loan.

At the same time, lower interest rates make relatively safe investments like bonds and cash less appealing, so companies and investors take the cash and buy equipment or other investments, like stocks. The S&P 500 takes off and Americans celebrate with a shopping spree. Businesses see a rise in sales and begin hiring again, and a virtuous cycle of more spending and more hiring ensues.

But many analysts and even supporters of the plan see dangers. It could make the weak dollar even weaker and lead to trade disputes with other countries. It could lead bond traders to believe that higher inflation is on the way, and they could derail the Fed’s efforts by pushing rates higher. Many investors argue that it may create bubbles as hedge funds and other speculators borrow cheaply and make even bigger bets on stocks, commodities and markets in developing countries like Brazil.

“It’s a desperate act,” says Jeremy Grantham, co-founder of the investment firm GMO. Grantham says it’s a clear message from the Fed to the rest of the world: “The U.S. doesn’t care if the dollar weakens.”

Here is a look at the ways the Fed’s strategy could backfire:

Read the whole article here: AP

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It’s Easy to Get Out of the Collpasing Dollar, But You Better Do It Soon

by Mark on October 31, 2010 14:54 pm · Comments/Link

More and more people are realizing that the US dollar will suffer a significant, if not devastating, decline in the not so distant future. How can we not come to this conclusion when the Federal Reserve itself is making it abundantly clear.

One of the economists on the forefront of alerting the public of what he believes is the complete collapse of the dollar is Peter Schiff. In this interview on CNBC’s Fast Money last week, this was the topic of discussion.

One of the panelists asked Mr. Schiff how people can move their money to foreign currencies. As I listened to this, I realized that there may be many readers who are unaware of how simple it is to invest in a proxy for a foreign currency.

One of the simplest ways is to buy one of the many ETFs that are priced to reflect the ratio of a foreign currency over the US dollar. If the foreign currency goes up, the value of your ETF rises; if the foreign currency goes down, the value of your ETF declines. For example, the CurrencyShares Euro Trust ETF (FXE) tracks the Euro over the US dollar. There are lists of ETF’s to be found easily on the Internet with a quick search.

Another very simple way to get your money to move as if it is denominated in a foreign currency is to purchase foreign stocks, or, for a broader diversification, foreign stock ETFs. Of course, you will have market risk, as with owning any stocks, but the value of the currency against the dollar will factor into the price.

While this was very simplistic, I hope that it at least introduced to novice investors a way to easily hedge against a dollar collapse. Now, enjoy this brief conversation between Peter Schiff and the Fast Money crew.

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Time to Buy More Gold as US Dollar Slides on Fed Statement

by Mark on September 22, 2010 7:47 am · Comments/Link

Everyone is Buying Gold

Yesterday the US dollar fell sharply against world currencies yesterday after the Federal Reserve suggested it’s ready to further stimulate the US economy: maintain artificially low interest rates and further quantitative easing.

This lit a match (again) under gold prices, as investors lifted the price of gold towards the $1300 mark. This is not just panic buying by retail investors, but buying by governments, funds and other institutions. Gold expert Max Keiser noted on the Alex Jones Show yesterday:

“Central banks for the first time in decades are buying gold,” Keiser explained. “Up until recently they were net sellers of gold, now they are actually buying gold. So, this is another huge piece of the equation for gold.”

Watch this video of Alex Jones interviewing Keiser on his show, and you’ll understand why you need to begin, or add to, your gold holdings.

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