US Dollar Crash

[governmentwaste]

We are at a critical juncture for the global financial system.

Many of you are probably aware that Iraq was attacked to mainly restore the petrodollar. However, Russia cannot be attacked.

Putin has made it clear that they want to be a player as a reserve currency. They will soon start trading commodities in Rubles, which will require their trading partners to exchange dollars for rubles.

It is likely that others will follow.

The dollar commodity market will soon change. Russia has the excuse of the unstable dollar, and they have been preparing for this moment.

[Syren123]

This sounds like a good time to start playing with world currency options.

[plopolp]

Playing with currency options is very dangerous, since forces will interfer in favour of the dollar too, before this is over. It's a process that might take years. Play, but play carefully! And avoid buying high implicit volatility, because that makes it difficult to gain a profit on puts, even when the USD does moves downward.

A latent threat to the USD must be the fact that it today is used as "reserve currency" all over the world. While this is great news for the USD as long as it lasts, it could be a terrible burden if it would loose that status, and already when that possibility dawns upon people.

Because if it is replaced internationally by other currencies (or gold) for trading oil and and other such commodities globally, then the demand for USD will fall drastically. The huge supply of USD which today is in demand abroad, would then have little use outside of the US itself. I'm far from an expert on economics, but my guess is that such an enormous oversupply of USD would make its value crash completely. And it could occur sudden through policy decisions in China, Russia, oil producing countries, EU.

Basically, everyone except the US government and the FED is a looser with todays system where the USD is a world reserve currency. Even "close friends" like the UK might look for their self interest on this issue.

The USD got its special status after WW2 when Europe lay in ruins and the US dominated the world economically. Even when the last connection to a gold standard was deserted in 1971, the USD kept its special status as "world standard currency" out of the pure dominance of the US economy in world markets. Not even the oil crisis and the stagflation of the 1970s could shake it.

But today the US is in a relatively much weaker position. Western Europe has been rebuilt, the Soviet system has collapsed so that now that part of the world too participates in world economic exchanges, and Asia has increased their share of the world GDP drastically (in 1971 not even Japan was a giant). The US doesn't dominate the world economy in the same way today. Add the present day huge deficits of the US to the equation, and I think I know for whom the bell tolls...

Even if the USD would ride out this storm too, using its military force and diplomoacy, in another 8 years or so when it is time for the next recession and, say, India has doubled its GDP, then that would be the day when the USD dies. Certain is that it is only a matter of time. Its grave has already been dug.

The good solution would be to in an orderly way transit to a gold standard. The price of barrels of oil whould be expressed in ounces of gold. And actually, expressed that way, oil prices have been surpricingly stable since 1971!

[RP4Life]

This sounds like a good time to start playing with world currency options.

That, or getting a job overseas and getting the heck out of a country about to wake up with a fistful of worthless paper.

[markpa]

Well I'm staying here in the US and trying to make it a better place so I plan on trying to make the best out of the situation. My plan is to have my savings in Gold and Silver when the dollar crashes. Then trade that in whatever form is necessary for property (house-land). If the last depression is any indication land and homes will be "cheap" and as long as I have a place to live I really don't care about being poor. I grew up that way and always planned on dying that way. People put too much importance on crap they don't need, I've never had much money but have always been happy.

[Bradley in DC]

Well I'm staying here in the US and trying to make it a better place so I plan on trying to make the best out of the situation. My plan is to have my savings in Gold and Silver when the dollar crashes.

I've got gold, euro and rand-denominated CDs at Everbank.com that are doing well now.

[jonahtrainer]

I've got gold, euro and rand-denominated CDs at Everbank.com that are doing well now.

Paper is paper and there is counter-party risk (http://www.goldmoney.com/en/commentary/2007-08-12.html). My cash is in gold and silver with title in my own name via GoldMoney.com (http://www.goldmoney.com) or my physical possession.


And avoid buying high implicit volatility, because that makes it difficult to gain a profit on puts, even when the USD does moves downward.

I agree. If you are going to trade Futures Options know what you are doing or be prepared to lose some money learning. There is good money to be made though.

For example:

In August I bought the ZG 700 Oct Calls for $842/contract. More were available at about $200/contract. It is currently trading at $3,152/contract.

Last Monday, the 17th, I bought the ZI 13.5 Dec Calls for $2,002/contract. It is currently trading at $3,686/contract.

[noxagol]

Futures are confusing as hell to me. I would just buy the actual material and hold on to it.

[LibertyEagle]

I've got gold, euro and rand-denominated CDs at Everbank.com that are doing well now.

When you mention you have a gold CD, is this what you are talking about?
http://www.everbank.com/001CertificatesMSGold.aspx?LinkID=Body1

[jonahtrainer]

Futures are confusing as hell to me. I would just buy the actual material and hold on to it.

Futures can be confusing.

Can't go wrong with the physical metal. If you are ever stressed out just get out 5-10 ounces of gold coins and hold it in your hands for 5-10 minutes. You'll be calmed down in no time.

[Dustancostine]

Futures can be confusing.

Can't go wrong with the physical metal. If you are ever stressed out just get out 5-10 ounces of gold coins and hold it in your hands for 5-10 minutes. You'll be calmed down in no time.

:D

[fsk]

There is one defect with owning physical metal. Someone can break into your residence and steal it from you.

Futures and options allow the use of leverage. When you buy a future or option, you're effectively borrowing at the Fed Funds Rate. If you believe that inflation will be 10-15%, borrowing at 5% to buy metal is a good deal. Of course, don't risk all your savings, so you don't get wiped out during the bust phase of the economic cycle via a margin call.

[noxagol]

There is one defect with owning physical metal. Someone can break into your residence and steal it from you.

Futures and options allow the use of leverage. When you buy a future or option, you're effectively borrowing at the Fed Funds Rate. If you believe that inflation will be 10-15%, borrowing at 5% to buy metal is a good deal. Of course, don't risk all your savings, so you don't get wiped out during the bust phase of the economic cycle via a margin call.

That's why I have guns and I hide the metal in the best place, in plain sight, painted black with acrylic paint. I do have a little bit of silver laying around, no one knows it but me, not even my girlfriend whom I live with.

[plopolp]

If you are going to trade Futures Options know what you are doing or be prepared to lose some money learning. There is good money to be made though.

For example:

In August I bought the ZG 700 Oct Calls for $842/contract. More were available at about $200/contract. It is currently trading at $3,152/contract.
Hey there!
I was on the other side of exactly that trade when I learned what I was doing!
:eek:

Damn you, give me my money back!
;)

[Man from La Mancha]

Even cash and your bank aren’t safe any more. With the U.S. dollar hitting record lows against one (comparatively) strong foreign currency after another, keeping lots of money in cash means you are losing 10-12% a year in purchasing power. Even worse, many banks and savings & loans are now at growing risk from deteriorating mortgage loan portfolios.

So where can you put your money now for safety and appreciation? The surprising answer is commodities.

Commodities Up As Much
As 1,870% Since 2001!

In the last ten years, commodities – like platinum, oil, and uranium – have been outperforming every other investment I know of. And according to our experts, the boom has many, many years to go.

If you think, 20-30% annual stock returns are good, just look at these triple-digit increases in commodity prices since 1998: (Prices as of 4-2-07)

Crude Oil $78 – up 759% since 12-21-98
Uranium Ore $120 – up 1,870% since 2001
Copper $365 – up 605% since 10-30-98
Platinum $1,300 – up 357% since 10-30-98
Lean Hogs $73 – up 351% since 12-14-98
Gold $675 – up 233% since 2001




If one does not to own gold at home this company sells gold shares like stock but you actually own the gold in one of 5 vaults thru out the world. The symbol is IUA and here is their web site http://www.ishares.com

.

[lucius]

...Can't go wrong with the physical metal. If you are ever stressed out just get out 5-10 ounces of gold coins and hold it in your hands for 5-10 minutes. You'll be calmed down in no time.

QFT...just picked up four 100 yuan panda...they feel nice and real :D

[jaybone]

We are at a critical juncture for the global financial system.

Many of you are probably aware that Iraq was attacked to mainly restore the petrodollar. However, Russia cannot be attacked.

Putin has made it clear that they want to be a player as a reserve currency. They will soon start trading commodities in Rubles, which will require their trading partners to exchange dollars for rubles.

It is likely that others will follow.

The dollar commodity market will soon change. Russia has the excuse of the unstable dollar, and they have been preparing for this moment.

I would advise to opt-out of the whole fiat currency system and move as much of your liquid assets as possible into physical gold/silver as well as high quality mining and energy shares.

If you are really that much in love with paper currency then I suggest accumulating those of resource rich countries such as Canada and Australia. But know this, it is now going to be a race to devalue currencies. When a currency appreciates vis-a-vis the US$, it makes exporting goods to the US much less economical. Weak currencies are good for countries that export goods (China), and bad for countries that import goods (US).

I can tell you one thing for sure, one ounce of gold will be worth exactly one ounce of gold 100 years from now.

[governmentwaste]

People will keep using currency. Check out the Merk Hard Currency Fund as an alternative to just gold/silver.

[jonahtrainer]

QFT...just picked up four 100 yuan panda...they feel nice and real :D

I've been wanting to get some pandas. Their premium has always been kind of high though. I have Eagles and Kugs.

As far as investing goes ... the Trend is your Friend. We are in a secular bull market for commodities and a secular bear market for stocks. When you can buy the Dow for 1 ounce of gold (currently it takes about 20 ounces; down from its high of about 40 ounces back in 1999) then I recommend switching to stocks. Until then ride stocks down and ride the bull up.

Using the GAP GoldMoney.com (http://www.goldmoney.com/en/gap.php) will, over the next 10 years, have a higher ROI in dollars than 99% of the 401k plans out there. Plus, it is liquid and not as subject to the future changes to retirement accounts (which is the next place to raid).

Ironically, all these boomers are 'swimming' against the trend. I was talking with one today about the perils of inflation. She kind of glazed over but I am sure she will remember our conversation as her nest egg goes 'poof.'

[jonahtrainer]

Hey there!
I was on the other side of exactly that trade when I learned what I was doing!
:eek:

Damn you, give me my money back!
;)

Lesson One my Young Padowan ... Too bad so sad :eek:

Rule One: Don't lose money
Rule Two: Always follow Rule One

[Corydoras]

We are in a secular bull market for commodities and a secular bear market for stocks.

What does "secular" mean? As opposed to what, can't be "theological"!
:)

[jonahtrainer]

What does "secular" mean? As opposed to what, can't be "theological"!
:)

From the dictionary I suppose the phrase would be 'age to age.' Usually these secular markets oscillate in about 34 year patterns. 17 years of secular bull and 17 of secular bear. This mainly has to do with the production cycle of hard commodities. Investing in the right market in the right way (being a bull in a secular bull market or a bear in a secular bear market) will largely determine your investing success and ability to retire.

We are currently in about year 6 of a 17 year secular bull market for gold. This little baby bull is getting a little bigger and more unruly but much more fun to ride :D Got to know what to holdem' and when to foldem' :cool:

Here is a great analogy (http://zealllc.com/2007/longwave3.htm):


Interestingly Saturn’s axial tilt is very similar to Earth’s, so an inhabitable Saturn would also have four seasons. But with a 29-year orbit, each season would run over 7 Earth years in duration. If you were born in the beginning of spring, then you would be 21 years old by the time your first winter arrived. Imagine how difficult it would be for your parents to explain the concept of winter to you if you had never experienced it after two decades of life. You might even suspect they were senile for predicting such a strange and hostile season.

Yet they’d be proven right. Like on Earth, the Saturnian seasons would be as inevitable as clockwork. But since even the most robust human would only witness three at best over an entire lifetime, they would be much harder for an average person to perceive. Young people, or folks new to Saturn, would have no reason to expect such seasons unless they had truly studied the past and used this knowledge to frame the present.

This is why the Long Valuation Waves are not widely perceived. With a wavelength running about 34 years, an LVW takes even longer than a full revolution of Saturn. And we do not even watch for LVWs over our entire lifespans, compounding the difficulties of understanding them. If an average person starts investing at 25 and retires at 65, then he only has 40 years over which to perceive a 34-year cycle. Obviously this will not happen casually and requires intense study.