Skip to comments.Dangers of a Dollar Collapse
Posted on 05/31/2009 5:42:20 PM PDT by arthurus
As the Federal Reserve continues to monetize the money supply (quantitative easing) at a breakneck pace, nations around the world have become very concerned about their holdings of US dollars and dollar backed assets. The dollar at this point in time looks like it's virtually guaranteed to lose its status as the international reserve currency.
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Joe Battaglia of Goldline has been saying for months that a devaulation of the dollar will be necessary. That we citizens will wake up one day and find the devaluation occurred.
How does one effectively hedge or profit from this?
Assets. Guns, Gold, Property, Animals, etc. Things which have inherent value.
Well, I have thought about this possibility happening. What would be safe investment choices to put all my 401K funds into? I would hate to see my 401k retirement account dwindle become almost worthless, due either to a dollar collapse and/or hypre-inflation. And I am thinking we may be headed in that direction, especially with obama giving our financial future away.
Obomba is all that we need to save us from everything bad in every way.
Before long, costs will be down, wages up, trees greener, roads smoother, pets happier,...well I'm running out of time. ; )
How to avoid the train wreck? Be in thoughtful prayer with God the Father and pray for big things.
as far as I can tell, it is hard to hedge vs. the dollar and have either liquididy OR leverage without paying a crazy time-based premium. As far as I can tell there is no low-capital magic bullet to deal with this, and I work in the financial sector as an independent trader and worry daily about whether I in effect have an ‘inflation hurdle’ to meet on total capital. Obviously 10% annual might only be 0.4% daily bankdays, but on 100k that is 400 *after-tax* bucks every bank day that you have to make just to meet that made-up inflation number, so you can see the concern motive.
currency and gold options are expensive, unfortunately with good reason. If there is a treasury short play here, I don’t understand it enough to do it and given the move in treasuries this year, I don’t think smart money would leave the biggest debt market in the world ungamed. Directly buying assets, such as land or commodities, ties up capital in potentially very illiquid ways.
Commodity ETF’s like DBA, DBC, UNG, UNO are pretty liquid.
I’ve been moving out of dollar denominated assets for a while now, mostly Canadian besides the commodity ETF’s and physical Au and Ag.
Place your bets...
Big things, like the sudden discovery of the valid BC of the Kenyan.
This is exactly what Rush was talking about when hoping zer0 would not be successful. Well, 120 day’s later, zer0 is successful, the Country is not, and where are the so called patriots who were carping at Rushes heals?
More importantly, Where are We...?
sell USD & buy real return bonds, or commodity linked assets, i’.e gold, copper, oil. Look to canada to hedge inflationary pressures on the USD. Canada may be a great play for you yanks.
It might be possible to buy another currency. Back a few months ago, a british pound cost $1.36. It’s now over $1.50.
If you’re thinking about traveling to another country in the future, and you want to lock in the exchange rates now, you could, I suppose, change your dollars to the currency where you’re going and put it in the bank over there.
I’m not an expert on these things, but I suppose you could do that or something like that.
And buy lots of ammo because we’re all gonna die.
Inflation is already happening! Just look at your grocery bill and you will see the difference.
Let’s just hope the the dollar collapse happens slowly - it is going to happen! The asshats in charge have no idea about controlling the economy - only draining it...
to protect against inflation, write out of the money call options on US treasury bonds.
GM is about to be replaced on the DJIA. What ever the choice it is sure to inflate the DOW & SPX. I am watching this as well. I expect the DOW to reach 9000 and the SP to reach 1000. At that time I will move my 401K to a stable fund to secure my gains then roll my 401K into a rollover IRA and go from there. This market is being manipulated big time by big money. When the DOW reaches 9000 and the SP reaches 1000 there will be a MAJOR sell off. Bargain hunting time. The is not an investment market but a trader’s market. Commodities and PM will be king. The USD will tank and quick and good traders will reap the benefits. Check the fast and slow stochastic for the financials and you will see what I mean. The cliff is coming but not for a bit. :)
lead, coffee, sugar, spam, more lead...
Losing reserve currency status would be a major shoe dropping.
What about an ETF like TBT?
maybe eventually, safe bonds
Read “The Coming Great Depression” by Harry Dent
Sorry, book title is “The Great Depression Ahead”
Depends on your situation. The basic idiom is "Get out of dollar-denominated everything".
Divest yourself of all US-based paper assets (stocks, bonds, even dollars). At this point, I am not even recommending precious metals or commodities.
Land, fungible knowledge, food, weapons. Stuff that, if you have it, makes money irrelevant.
Smart move! Prices have moved up measurable in the last two months. The ones I have noticed most are Cokes - went from 3.98 to 4.98... I should have more information, but that is the jest of it...(coke drinker)...
By standing at the end of the pipe that's spewing money, rather than sitting in your own little pool that's going to get sucked dry, like most of us suckers.
"And you may ask yourself, where's my moon?"
What does that mean?
How do you move into Canadian?
Be able to speak Frenchian and show that you can invest into their economy and create jobs?
Buy stocks of Canadian commodity producing companies. There are plenty of Canadian Royalty Trusts that pay a healthy dividend in Canadian dollars to your American brokerage account where they are exchanged for USD.
The drawback with the CanRoys is that Canadian tax law is changing in '11 that will take away much of the tax advantage so they will be converting to a corporate structure and will lower the divy. I've decided to stick with them though as of now because in any case they will still be reasonably good income producers and probably better show more growth as opposed to income.
There are also plenty of good Canadian mining companies if you want exposure to metals (uranium and nickel primarily).
Another company I recently bought is the Australian BHP Billiton. I lucked out and bought at the right time because they have shot up lately. The Chinese have been particularly interested in BHP for at least a couple of years.