The Buck Has a Stage-4 Malignancy: Part 4

By Dr. Russell McDougal

Awareness of a perpetually sinking dollar is the order of the day.  That has been the theme of my three previous articles (click here for an archive of all IDE issues).  The next essential step is to protect yourself from the coming debacle.  How can you accomplish that goal?

One way is to exchange your dollars for other currencies as a form of protection.  The rationale is to hold money issued from a country perceived as having a greater “faith and credit” ranking.  Currencies are typically rated according to their issuing country’s fiscal and economic characteristics.  Currencies of countries that run a sound ship will enjoy international prestige and value, such as the historic Swiss Franc.  But when you abuse the printing press and run up unpayable debts (as have many third-world countries over recent decades), you will engender poor faith and little credit.

A key exception to these general rules is the U.S, the world’s issuer of primary reserve currency since World War II.  We have had the economics, the gold (for a time), and the fiscal discipline to long enjoy the privilege of issuing the paper that has dominated global currency transactions.  Dollars have been in constant demand everywhere for many decades because of this assigned privilege.

But that can no longer be taken for granted.

The Euro has now displaced the buck in dominating global economic transactions.  Essentially, we now have dual reserve currencies.  This means that the dollar must now stand on its fundamentals like other fiat issues.  That’s a problem.

As a side note, is it unpatriotic to speak ill of the dollar?  Absolutely not!  It is unpatriotic to run an unconstitutional printing press, amass unconscionable debts, steal money from the unsuspecting, and destroy/dismantle national industries.  The end result to the dollar will be a direct reflection of these and other catastrophes.  The true patriot will shout it from the rooftops.

For more shouting, I recommend an article by Congressman Ron Paul that demonstrates complete dissatisfaction with the current fiat system.

Global currency diversification is one way of achieving protection.  Countries with resource-based economies such as Canada or Australia are attractive destinations for investment.  Switzerland historically maintains a sound currency and should also offer upside versus the dollar.  The Euro has appreciated more than 50 percent against the dollar since hitting its initial lows.

Interestingly, you can invest in foreign currencies and foreign debt-denominated bonds or money market vehicles and still get FDIC insurance.  Go figure.  Check it out at everbank.com.  They are very competent and offer excellent products.

While alternate currencies offer a fantastic way to get out of the dollar, they’re not the best option.  The best thing you can do is acquire different forms of “hard” or “real” assets.  But what qualifies?

Unleveraged real estate, rare coins, gold or silver bullion, art, collectables, and a myriad of other items clearly fit the bill.  All are real rather than paper-based assets.  Natural resources such as copper, tin, lead, oil, or gas are also real assets but storage is somewhat problematic.

Since natural resources around the world are still predominately priced in U.S. dollars, they directly benefit from dollar woes.  Resource stocks benefit accordingly.

It is also my assertion that both gold and silver serve as “money.”  Of course, they are not universally recognized as such, but the manner in which they are officially managed speaks volumes about their real standing.  Here’s a quote from the esteemed Privateer (www.the-privateer.com) out of Australia:

“In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a POLITICAL metal.  In the true meaning of the word, its price is ‘governed.’  This is so for the very simple reason that Gold in its historical role as a currency is fundamentally incompatible with the modern worldwide financial system.”  (Reproduced with permission.)

Silver, though not therein mentioned, is also suppressed.  There is now so much clear-cut evidence of these nefarious activities, only the most naïve precious metal pundits fail to recognize them.

In summary, these four articles on the dollar’s woes point to a historic dollar bubble and an international fiat monetary system that is thereby extremely stressed.  The serial bubble blowers have outdone themselves.  If this somehow ends without calamity, it will be a first.

Escape the dollar bubble.

Invest Resourcefully,

Rusty

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It’s Time to Get Bullish on the Dollar

By Charles Delvalle

I’m not going to lie and tell you that the dollar is going to come back from the grave.  Quite honestly, it won’t anytime soon.  But I can tell you that the dollar is ready for a short-term bounce.  All it takes is a quick look at the dollar index to see what I’m talking about.

The dollar finally broke through support at 82.50 to hit slightly below 82, its lowest point in more than 11 years!

With the risks of a slowing economy combined with higher inflation, it’s no wonder that the dollar has been tanking lately.  But it can’t go down forever.  Considering the RSI and slow stochastic are both at oversold levels, the dollar appears ready to bounce.

But you should still wait until after this week’s slew of economic reports before placing your bets.  If any reports show a slower-than-expected economy, the dollar could fall a bit further.  After all is said and done, next week should begin the dollar’s next upleg, potentially taking it back up to the 83 level.

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