Some scary stuff about the dollar

[BAK]

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Only helps if there is wage inflation. Possible scenario is that wages stagnant,cost of living inflates and most people's standard of living goes down.

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This is exactly what's been happening for years.


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more scary dollar stuff...oil-rich countries are switching to other currencies:

Venezuela (Citgo) dumps the USD
http://www.bloomberg.com/apps/news?p...d=aZ62iRNzmRo0
Sept. 16 (Bloomberg) -- Venezuelan President Hugo Chavez instructed Petroleos de Venezuela SA, the state oil company, to convert its investment accounts from dollars to euros and Asian currencies to reduce risk. Chavez, speaking in his weekly address on national television, said the U.S. has bought goods from around the world, paying with paper that is ``a bubble.'' ...


Iran moves to ditch U.S. dollar
http://www.upi.com/International_Securit...us_dollar/6990/
WASHINGTON, Sept. 10 (UPI) -- Faced with U.S. economic sanctions and a weak dollar, Tehran is demanding foreign energy companies do business in yen and euros, despite increasingly desperate need for investment.

In a deal announced last week, Japan’s Nippon Oil agreed to buy oil from Iran using yen instead of the traditional U.S. dollars. The agreement comes after years of Iranian efforts to shift its petroleum exports away from dollars and toward yen and euros..

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Some people have written that this is one of the main reasons for the current war. To ensure that the USD remains the currency for the oil trade.
http://www.ratical.org/ratville/CAH/RRiraqWar.html

Petrodollars Wikipedia

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I really don't think it is any coincidence that these two countries are on Bush's "enemies" list.

[BAK]

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So what if you think it's going to happen? What's the best investment - foreign stocks, bonds, US stocks, money market? (Basically I'm listing off the options in my 401k, sadly gold and a plasma TV are not options.)

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My hubby is on the same wavelength as your friend. He did find a gold fund he could invest in with his self-directed 401K (its ticker symbol is GLD). He has been reading a book called "The Coming Economic Callapse: How you can Thrive When Oil is $200 a Barrel" by Stephen Leeb.

[TheMetetron]

I'm now fairly confident that this is the time to get the hell away from gold. Anytime you start hearing that everyone thinks it is a great idea to buy something as an investment means it is going to drop out in the somewhat near future.

All the amateurs trying to time the cycle of currency fluctuations are amusing to me. Currencies are pretty volatile things as is evidenced by the value of the Euro over its lifetime. Stick with an asset-allocation (that can include gold if you think it is good long-term) and go with it. Too much reactive thinking by people.

[Tweety]

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On a related note, I'm in the UK. How would I go about buying gold? I don't want an actual lump of the stuff (sorry if this is naive), but I assume there're trackers for it? For gold companies?

It seems inconsistent of me to have money in a savings account at 6.4% but not in the stock market because I expect the market to fall in the near term, when there're stocks I can put money in that'll do better as the market does badly.

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Buy gold futures. Open a futures account and tell them you want to go long gold. Problem solved.

[Borodog]

Take with a huge grain of salt, but this is a fun (or scary) read:

http://www.gold-eagle.com/editorials...ack012605.html

[JMa]

thought the thread was gonna be about this:

[BigPoppa]

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I think the two biggest looming disasters are:

a) when foreign nations stop seeing us t-bills as the safest place to store their reseves

b) when third world countries/drug dealers stop using the US dollar as their currency

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The dollar might as well be pesos when this happens.
Foreign investors and foreign entities using dollars for transactions are the only thing keeping us afloat.

[Borodog]

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please explain how a dollar "collapse" is different that the dollar just continuing to slide down as it has for the last several years?

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Currently there are trillions of USD being held outside of the US. As the USD slips, those holdings lose value. So all those holding them have a depreciating asset. At some point, the rats are going to desert that ship. This will precipitate the sell-off of USD, and their international value will literally plummet (imho of course).

Once the international value tanks, people are going to be stuck with all these devalued dollars. They will try to recoup their losses. How will they do that? They will buy up anything and everything they can get their hands on that they can buy with USD. But the only place that will be will be the United States. Exports will skyrocket. Foreign investors will buy up American real estate and companies, you name it. The trade deficit will become a trade surplus (which is not a good thing, no matter what Lou [censored] Dobbs thinks). All of those dollars flowing back into our economy will creat massive double digit inflation.

Meanwhile, our inflation-bubbled economy is certainly going to pop at the same time, meaning we will get a massive recession. We'll have massive inflation and a recession, just like the 1970s.

The value of gold will skyrocket as people look to get out of USD that are losing value daily. This happened at the end of the 70s as well. Gold hit $800 per ounce in late '79. In today's inflated dollars that's like $2400. Currently it's at like $735 and climbing _fast_.

Central banks prevented gold form spontaneously remonetizing in 1980 by instituting massive gold dumping to crash the market value of gold and convince people that their inflation hedge bet had failed. It worked. Central banks have been gold dumping off and on for 30 years to control the price of gold.

But my gut feeling is that there is not enough gold left in the central banks of the entire world to prevent it again. So the dollar will crash, we will get a massive recession + massive inflation and a flight to gold. The price of gold will double or triple or quadruple. Central banks will dump gold, but it will fail. If they do try this, and the price of gold crashes, you should buy as much as you can, because when they do this they will be putting real money back into circulation and you want to have as much of it as you can get. Gold will spontaneously remonetize, and the world fiat currency order will collapse.

That's my theory.

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I realized there is a mistake in my reasoning. That being, everyone else can also follow this chain of reasoning. Why would foreign dollars holders wait until AFTER the dollar tanks to start trying to recoup their losses on their dollar holdings? Why would they sell off dollars for Euros or Yen when that would crash the value of the dollar, and hence their remaining holdings? They wouldn't.

Instead I realized that they will start getting out of dollars now, not by buying other currencies, but rather by buying up US assets, like companies and real estate.

And then lo and behold, what do I find out last night? Dubai is buying a 20% stake in NASDAQ, apparently with only a 5% voting share. I will make this prediction: I bet if you were to look around the market, foreign investors are buying up US companies and real estate left and right, and that the rate is increasing. The trade deficit already took a healthy whack as exports ticked up sharply, and I bet the same is reflected in US hard assets.

I don't really know how to check this prediction, though. Anyone know of any reports on foreign acquisition of US companies and real estate?

[Leaky Eye]

If any of us in this thread, or any of the authors sited in this thread could predict currency movements at greater than 50% accuracy we would be billionaires already.

[pig4bill]

It doesn't take a prediction. Just open your eyes and see what is happening now.

http://quotes.ino.com/chart/?s=NYBOT_DX&v=w