Get out of the dollar (US)

I'm just going to post this as a brief warning of what I see happening in the markets abroad.

Why should you care what I am saying, and who am I? I am a software engineer, and stock trader. I enjoy writing software to algorithmically detect if a security will go up or down. I also have been studying the markets for 10 years.

The trend here is rather simple, and these are the warning signs that something is up. This could be inflation, or it could be a large devaluing of the US currency.

1.) We're buying our own debt to keep down interest rates for bonds. (If we end this the stock market will drop, if we don't we'll keep devaluing the dollar. )
2.) The interest rates are going up world wide, and we're not leading this time. (we used to change our rate before the rest of the world)
3.) Gold and silver are making new highs almost every day now. (1515, and 47.50)
4.) Silver is returning to it's natural 16 to 1 relationship with gold.
5.) The US dollar is at it's 2 1/2 year low, and it's accelerating on the way down.
6.) The US is currently engaged in 3 separate wars
7.) The US will raise the debt ceiling
8.) The "cuts" they made account for less that 1% of the deficit
9.) Oil, corn, wheat, cotton, sugar, and milk prices are raising at alarming rates.
10.) China is dumping US assets China trims US assets
11.) There is a shift away from the US dollar as the worlds reserve currency. Reserve Currency
12.) The Walmart CEO is warning of "serious" inflation. Walmart Inflation
13.) European debt is impossible to pay back, and they're getting loans just to get them through a few more months before failing.
14.) S&P set the US outlook to AAA negative

Everything I mention here is measured in US dollars. If one commodity goes up that could be a natural thing, but when all of them start going up you can see it's actually the purchasing power of the dollar that is the problem.

So as the dollar fails, China's currency will begin to appreciate. This will mean Walmart and other stores will become increasingly more expensive. This will actually stop us from importing so much from other counties.

Do your own research, and decide for yourself. If you find yourself concerned of our fiscal situation here are some ways to protect yourself.

Good ways:

- Gold : inflation adjusted high is 6500
- Silver : inflation adjusted high is 6500/16 or 406.25
- Swiss francs : backed in gold
- Canadian dollars : Canada has natural resources, and a fiscal situation that isn't that bad

If you want more information about what is going on:

Aftershock(the book)
Meltup (documentary)

reply to post by arthurium


I think its also worth mentioning that the dollar has been on a long-term weakening trend for years now.
futures.tradingcharts.com...

Its not really so much about to crash as it will be resuming the downward death spiral it has been locked into for years.

The Zimbabwe currency took at least five years to fall worthless. Technically its possible the dollar could be destroyed within days. But its far likely to be a process that takes years.

I sorely miss trading the markets... I used to make decent money doing that! Eventually I'll get back to it but there are some websites I want to design right now.

The dollar will fall according to plan. They will pull the plug whenever they damn well please. The whole game is rigged.

As much as I feel the whole game is rigged.. I feel the US$ will not fail and prior to any next cliff drop we (in the West) will be dragged into a wider conflict.

With the wider conflict come emergency powers.. the UK used those in WW1 to prevent anyone converting their bank notes to gold..

IMHO.. the governments need that level of crisis to implement that style of emergency legislation to ensure their position (and arses) are protected.

*IF* they allow the US$ to collapse then the domino effect will be taking down most Western nations.. the by product of which will be a huge amount of anger directed at the elite/bankers/corporates..

If the elite allow that to happen they literally put not just their own neck on the line but their friends and families necks on the line to.

So I really do not see it happening.. I see us being dragged into a major conflict beforehand.. with the losers (whichever side) being lumbered with whatever debt is floating around while everyone gets raped of their resources.

reply to post by civilchallenger


What's interesting about that chart is that it's being indexed against other fiat currencies, and still it's the weakest of the bunch.

Also, from a technical standpoint each high is lower than the last, and each low is lower. If it falls below the 75 level (the low of 2008) that could drive even more investors out of US denominated assets.

Originally posted by arthurium
reply to post by civilchallenger

 

What's interesting about that chart is that it's being indexed against other fiat currencies, and still it's the weakest of the bunch.

Also, from a technical standpoint each high is lower than the last, and each low is lower. If it falls below the 75 level (the low of 2008) that could drive even more investors out of US denominated assets.

I thought it dropped to 73 something the other day.

Me wonders what the Bernanke will say on Friday.

reply to post by mayabong


It's at 73.60 currently. Things aren't looking very good.

Usually when the stretch between the commodity and stock market prices making record highs and the dollar index making record lows gets this wide its time to start looking for a trend reversal. Historically the spring oil rally often lasts till almost Memorial day on the premise that the summer driving season will stimulate demand. That might mean the dollar index continues to slide to 71 making a double bottom with the 2008 all time low.

Without a preemptive intervention by the Fed, an inflationary cycle is more likely to take root. When this has happened in the past the interest rate ratcheting follows behind and the inflationary cycle can last for years.

Too many different scenarios to predict what they will actually decide to do. A three year double bottom on the US dollar index would psychologically make a nice floor that would fend off any surprise future currency attacks, but an awful lot of seasoned investors seem to feel the battle is already lost?

I have a hard time seeing the real value in 'gold' if the entire economy collapses.

It seems to me gold would have little value in an economy with no uses for it.

If you expect the US Dollar to collapse, investing the Canadian dollars is a horrible idea. If the United States falls, it will definitely drag Canada, Mexico, and likely much of Europe down to the bottom with it.

reply to post by burdman30ott6


I agree. The thing to do would be to put your money into "real" things, like stock of companies that deal with resources (oil, as much as I hate to say it) food, etc. Im wary of gold, myself, mostly because the insiders will get the word long before any one at the lower end of the game does when its time to sell, and if its a bubble, you will end up getting burned.

The problem for us little guys is that we are guessing on a rigged game. The big players dont have to guess the markets, they move the markets with their decisions. But I do tend to agree the future of the dollar is bleak. I just dont have a great idea where to go other than away from currencies and towards tangible items that have intrinsic value. (Meaning demand for them will change little even if the economy collapses)

There really is no fool proof way to avoide recourse if and when the dollar collapses, if your simply tied in to western living. The only thing I can offer is to learn a trade and/or survival skills so that when we fall back on a type of barter system to live by in the abscence of promissary notes, you'll have something to offer thats 'worth' something. I'm not one to really pay attention to 'the sky is falling' corner walkers, but it's always a good idea to have something of worth that can come from your hands/mind if thats all we are left with to survive.

reply to post by burdman30ott6


This is my general feeling about investing n gold and other metals. It's still valued against the dollar, right?

People are EXCITED that the value of gold has increased in relation to the dollar. But if the dollar truly tanked, which would mean the whole world economy tanks, I have a hard time seeing the dollar retaining much value in the short run. Who would buy it, and with what? Chickens and goats?

reply to post by incrediblelousminds


Take a look at the longer term trading range for the US dollar. Although we have been watching a steady decline over just the last 7 months historically there have been many surprise trend reversals.



Who would buy? Financial markets become volatile on news, for example the Fed could change its stance on interest rates by summer after just a couple of sharp monthly CPI or PPI moves. Most dynamic day traders would be dumping stocks,oil and gold and buying the dollar futures in that scenario.

Originally posted by incrediblelousminds
reply to post by burdman30ott6

 

This is my general feeling about investing n gold and other metals. It's still valued against the dollar, right?

People are EXCITED that the value of gold has increased in relation to the dollar. But if the dollar truly tanked, which would mean the whole world economy tanks, I have a hard time seeing the dollar retaining much value in the short run. Who would buy it, and with what? Chickens and goats?

edit on 23-4-2011 by incrediblelousminds because: (no reason given)

Gold is valued against the dollar, yes. That means that if you bought Gold now at $1515, and the dollar fell %50 your gold would be worth $3030 dollars.

Who would want your gold? Golds been a store of value for all of humanity. It's got at least 5000 years of solid history, and people always traded with it. It will always have some kind of value no matter what, so will silver.

But I'm just saying, when gold is 6k an OZ and they introduce a new currency, you'll retain your buying power in whatever they come up with to "fix" this problem.

Things that influence the price of gold:

1.) Stability : When markets are unstable the price of gold will rise, because it's the best choice at the time to make money.
2.) The value of the dollar
3.) Inflation - Inflation is tied in with 2, but it's not a direct devaluing of currency.

If you look at germany in the 1920's, they were in multiple wars that they were financing. They printed 4x their money supply to fund the wars. By the end of it 1 oz of gold could buy an apartment. So how did the successful protect themselves in germany? Gold.

But like I was saying before, I don't think all currency is going to fail. Canada, Australia, and Switzerland are in a good position for their currency to hold it's value against ours.

If you do some research and find a way to protect yourself and nothing happens you lose nothing, if you're unprepared though you could lose everything.

Gold is heading for ...

Originally posted by burdman30ott6
If you expect the US Dollar to collapse, investing the Canadian dollars is a horrible idea. If the United States falls, it will definitely drag Canada, Mexico, and likely much of Europe down to the bottom with it.

I'm not saying the US is going to collapse. The current data points to a large devaluing of the US currency.

If you really think that the US is going to completely melt down, then it's probably a bad idea to have any fiat currency. However, I don't see the data pointing to that. I see a lot of chaos in the near future, but not that.

► It's absolutely logical that a gradual depreciation / devaluation of US dollar taking place now after China's currency manipulation for decades.
► China has strong economy today because of its exports thanks to China government that kept its Yuan low.

► China is also troubled with its own debt (RMB33.6 Trillion = USD5.16 Trillion) China's Government Debt Higher Than Portugal


☺

As the dollar continues to decline the Sheeple will become Weeple as everything you buy will skyrocket in price.
Politicians will say it is not our fault. Even though it is due to failed economic policies on both sides of the isle.
What do you buy to survive the declining dollar and escalating prices on everything you buy? This is what I am
doing purchasing food reserves locked in at a lower price with extended shelf life that I am taking possession of
constantly. Read very carefully, Silver is the poor and middle class man's and woman's Gold and Gold is the rich
man's and woman's playground. Clean water in my opinion will be the key to everyone's survival in the
future. If you buy land make sure you have a well, fresh water lake or river attached to your property and if you
have a well make sure you have a proper hand pump to pump water with out electricity. Must have excellent
water filtration system again it is for your family's survival. Organic Seeds will be exchanged like Gold and Silver along with anything you can barter and when you wake up one morning and all the politicians can not be found and you find they are in their safe underground cities stocked with years of food, water and with fresh air what will you think then. You my friends will be left to fend for yourself. This is what will happen like people will congregate for protection and there will be 2 groups of people the Givers and the Takers for survival which will you be? There are many many things you must be collecting for your basic survival the list is too long just use common sense. Buy survival books or search the internet there are almost unlimited resources of info on survival. So here is the question when is the day and hour that the dollar will buy hardly anything? www.myfreefood.us...
^Y^

Huge jump for the dollar bavk up over 74 today! The Dow closed down over 139 points. Hope you gold bugs took some profits when they were available.

reply to post by Tephra


Agreed, have you ever read 'Pawns in the game'? It's a good read, talks about how everything is set up and allowed to happen for the future of a nwo.