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Dangers of a Dollar Collapse
Seeking Alpha ^ | May 31, 2009 | Donald Ingram

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.

(Excerpt) Read more at seekingalpha.com ...


TOPICS: Business/Economy; Government
KEYWORDS: collapse; goldbugs; hardmoneymyths; inflation

1 posted on 05/31/2009 5:42:20 PM PDT by arthurus
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To: arthurus

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.


2 posted on 05/31/2009 5:44:43 PM PDT by lilylangtree (Veni, Vidi, Vici)
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To: lilylangtree

How does one effectively hedge or profit from this?


3 posted on 05/31/2009 5:46:26 PM PDT by ItisaReligionofPeace
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To: ItisaReligionofPeace

Assets. Guns, Gold, Property, Animals, etc. Things which have inherent value.


4 posted on 05/31/2009 5:47:41 PM PDT by thefrankbaum (Ad maiorem Dei gloriam)
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To: arthurus

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.


5 posted on 05/31/2009 5:48:58 PM PDT by rawhide
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To: rawhide
And I am thinking we may be headed in that direction, especially with obama giving our financial future away.

No way!

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. ; )

6 posted on 05/31/2009 5:53:56 PM PDT by EGPWS (Trust in God, question everyone else)
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To: ItisaReligionofPeace

How to avoid the train wreck? Be in thoughtful prayer with God the Father and pray for big things.


7 posted on 05/31/2009 5:55:00 PM PDT by Broker (Reward: $100.00 for the lost book of Islamic Praise Songs.)
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To: ItisaReligionofPeace

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.


8 posted on 05/31/2009 5:55:06 PM PDT by WoofDog123
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To: WoofDog123; ItisaReligionofPeace

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...


9 posted on 05/31/2009 6:03:07 PM PDT by seowulf (Petraeus, cross the Rubicon.)
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To: Broker

Big things, like the sudden discovery of the valid BC of the Kenyan.


10 posted on 05/31/2009 6:05:47 PM PDT by 353FMG
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To: arthurus

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...?


11 posted on 05/31/2009 6:08:06 PM PDT by reefdiver (So how's that HOPE & CHANGE working out for ya ?)
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To: arthurus
The dollar at this point in time looks like it's virtually guaranteed to lose its status as the international reserve currency.


12 posted on 05/31/2009 6:09:13 PM PDT by Iron Munro (With Obama in charge things are going to get worse before they get a lot worse.)
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To: ItisaReligionofPeace

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.


13 posted on 05/31/2009 6:13:32 PM PDT by bubman
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To: ItisaReligionofPeace

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.


14 posted on 05/31/2009 6:14:36 PM PDT by truthfreedom
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To: arthurus
Obama’s legacy: total collapse of the US economy and trashing to the dollar, total destruction of the greatest country on God's green earth!!
15 posted on 05/31/2009 6:15:30 PM PDT by RetiredArmy (If it looks like Marx, sounds like Stalin, IT IS PROBABLY OBAMA & the Dimocrats.)
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To: arthurus

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...


16 posted on 05/31/2009 6:24:15 PM PDT by Deagle
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To: WoofDog123

to protect against inflation, write out of the money call options on US treasury bonds.


17 posted on 05/31/2009 6:26:14 PM PDT by staytrue
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To: rawhide
Gold

Silver

Gold

18 posted on 05/31/2009 6:39:36 PM PDT by arthurus (ACORN + Amnesty = Venezuelan DemocracCan I pray for the soul of this man?y in the USSSA)
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To: rawhide

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. :)


19 posted on 05/31/2009 6:42:59 PM PDT by Polynikes (Viene una tormenta)
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To: arthurus

ping


20 posted on 05/31/2009 6:44:55 PM PDT by Bellflower (The end of this age is near but the beginning of the next glorious one is coming!)
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To: arthurus

lead, coffee, sugar, spam, more lead...


21 posted on 05/31/2009 6:45:03 PM PDT by WVKayaker ( God said, 'Cancel Program GENESIS.' The universe ceased to exist.- Arth. C. Clarke's shortest story)
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To: arthurus

Losing reserve currency status would be a major shoe dropping.


22 posted on 05/31/2009 6:46:46 PM PDT by GOPJ (To a community organizer, every citizen looks like a victim entitled to someone else's money-Philbin)
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To: WoofDog123

What about an ETF like TBT?


23 posted on 05/31/2009 7:20:57 PM PDT by Eccl 10:2 (Pray for the peace of Jerusalem - Ps 122:6)
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To: Polynikes
GM is about to be replaced on the DJIA. What ever the choice it is sure to inflate the DOW & SPX.

Not necessarily. When a Dow or S&P component is replaced, the new company is added at the same weight as the company being removed. Right now, GM's weighting in the major indexes is minimal.
24 posted on 05/31/2009 7:28:43 PM PDT by irishjuggler
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To: rawhide

cash works

maybe eventually, safe bonds

Read “The Coming Great Depression” by Harry Dent
http://www.youtube.com/watch?v=YYVrjV9-iSA


25 posted on 05/31/2009 7:31:33 PM PDT by silverleaf ("Never forget that everything Hitler did in Germany was legal ( Martin Luther King))
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To: rawhide

Sorry, book title is “The Great Depression Ahead”


26 posted on 05/31/2009 7:33:11 PM PDT by silverleaf ("Never forget that everything Hitler did in Germany was legal ( Martin Luther King))
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To: ItisaReligionofPeace
How does one effectively hedge or profit from this?

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.

27 posted on 05/31/2009 7:52:16 PM PDT by Costumed Vigilante
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To: Deagle
Inflation is already happening! Just look at your grocery bill and you will see the difference.

We wouldn't know...we stocked up when 0 was inaugurated and haven't been back to the store for many things. But we provide a lot of our own needs right here on our own property.
28 posted on 05/31/2009 7:52:17 PM PDT by jy8z (From the next to last exit before the end of the internet.)
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To: jy8z

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)...


29 posted on 05/31/2009 7:55:44 PM PDT by Deagle
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To: ItisaReligionofPeace
How does one effectively hedge or profit from this?

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?"

30 posted on 05/31/2009 8:59:45 PM PDT by dr_lew
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To: dr_lew

What does that mean?


31 posted on 06/01/2009 3:56:38 AM PDT by ItisaReligionofPeace
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To: seowulf

How do you move into Canadian?


32 posted on 06/01/2009 3:58:48 AM PDT by ItisaReligionofPeace
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To: ItisaReligionofPeace

Be able to speak Frenchian and show that you can invest into their economy and create jobs?


33 posted on 06/01/2009 5:12:40 AM PDT by silverleaf ("Never forget that everything Hitler did in Germany was legal ( Martin Luther King))
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To: ItisaReligionofPeace
How do you move into Canadian?

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.

34 posted on 06/01/2009 8:17:11 PM PDT by seowulf (Petraeus, cross the Rubicon.)
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