DISQUS

Retirement Savior · 1 month ago

I would suggest against buying gold or precious metals. They have a negative cost of carry, so you are paying to own it. It would be better to own foreign assets that would not hurt from dollar deflation. For instance, consider foreign treasuries instead of gold for safety, like ticker BWX. Then at least you would receive interest on your investment.

In addition, it might be late to panic out of dollar assets. The market rally and dollar decline are highly correlated. It makes sense to wait and diversify away from the dollar over time.

Mike Piper · 1 month ago

I think it's important to remember that it's no secret that China is likely to continue to grow faster than the U.S. and that the dollar is likely to decline in value over coming years.

Both of those facts should already be priced into the market values of stocks (both Chinese and U.S. ones). In order to earn above-market returns, you need to have reason to think that the dollar is going to decline at a rate faster than the rest of the market expects it to, or to think that Chinese companies will grow faster than the rest of the market expects them to.

It's not about "what's going to happen." It's about how "what's going to happen" compares to "what people expect to happen."

Jim · 1 month ago

The dollar still represents about 66% of world foreign reserves compared to 25% in the Euro. We were under 60% back in the mid 90's. The dollar actually got stronger during the economic crisis since its a 'safe haven'. I think the demise of the dollar is premature.

But on the other hand it is probably a good idea to be diversified somewhat in foreign holdings in some way or another.

I don't think China will grow that fast for another decade. Just my opinion here, but they already grown 8-10% a year for a couple decades. They can't continue to grow at such a fast rate forever, at some point they will plateau. Think about it... we can only buy so much stuff from them.

RJ Weiss · 1 month ago

@ Mike Piper - Great comment, couldn't agree more.

Gold has already shot up in price.

I just don't see the advantage of diversification in gold compared to an international index fund.

Atlas · 1 month ago

Gold = Wealth

We savers are never going to be negative or close to $0.00 we will always save money or create wealth. If you are a saver and have no debt what is the plan? It is t create wealth so you can give to charity or pass along to children etc...

Having a million dollars sitting in the bank is what? it is paper(that has lost value since 1913) that you are never going to see, so it really is just a number you can look at. Buying gold shouldn't be looked at in my humble opinion as an investment. Gold it is a true measurement of your wealth and it always has since the beginning of time...

Alexander the Great, tutored by Aristotle, perhaps the richest and most powerful man in the world before the age of 33, was interred in a gold sarcophagus and solid gold casket filled with honey and transported by a solid gold chariot to a solid gold mausoleum in Memphis. It did not take long for various Ptolemy successors to steal the gold and move the body to Alexandria to put it on display under glass, with gold thefts every time it was moved or displayed.

Practically every war included the surreptitious movement of gold from the vanquished to the conquerors, providing stories of Chinese, Indian, Mesopotamian, Egyptian, Israel, Knights Templar, Arabic, Spanish, French, Revolutionary, Civil War, Philippines, Nazi, Korean, Vietnamese and Iraqi gold hoards accompanying inflation.

Since gold is ultimate money and power, is it any surprise Mercantilist Bankers and Treasurers tried for many thousands of years to get or control it?

I am just getting to the point where I will be dollar cost averaging Silver/Gold for about 5-10% of my portfolio has a hedge against the dollar and the creation of my wealth!

MoneyEnergy · 1 month ago

One of the most important economic topics of our time - it is far from conspiracy and I would say that investing your money in international stocks and currencies is far from risky when you compare it with the actual wealth behind the USD. The Euro is not the only alternative currency, either. The Canadian and Australian currencies are great strong alternatives.

I've been reading a bit more lately on what's happened to economic policies/trends in the U.S. since the 1980's and it's not pretty. In fact it has me pretty riled up. Want to remind people that there are many ways to practice capitalism and that the corporatist plutocracy (in U.S.) of the last 20 years isn't the only form it has to come in.

Also, there are dangers that even under Obama, the powers that be will seek to spin the dollar's devaluation and attendant economic problems domestically with stories blaming it on other countries - especially East Asia, middle east/Africa (all that Nigerian oil politics, you know....). I hope that doesn't happen. There is already so much misinformation domestically about the real economic situation that it would be all too easy to pull another one over on the majority of the population. Keep a watch out on Geithner, too, continuing to publicly talk about a strong dollar. The worse the dollar gets, the more he's gonna have to do this.

I am not broadly invested in U.S. securities and I would definitely stay out of U.S. bonds.
Just my two cents...

Kyle · 1 month ago

This is all well and good, but what does it matter to Joe the plumber or other people who don't/can't invest. They are still going to get paid in the dollar and they are still only going to buy things with the dollar.

What everyone else thinks the dollar is worth means nothing to them, as long as they can buy food, beer, and diapers. He isn't going to be out trading dollars for Euro's.

ctreit · 1 month ago

I think that the zenith of economic power has been reached in the US. Other nations have not only realized but they are also actively discussing ways to diversify their holdings out of the US$. In my view it is inevitable that the US$ will lose its importance during our lifetime. But this is the way the world is. It is a dynamic place and things change. Some things change faster than others. Only 50 years ago Sterling was still a major currency but it has become an also-run currency whose value dropped for a while until it found its new level. - My biggest concern is the lack of industrial production here in the US. We buy things from overseas, especially stuff that we consume every day. Check out the labels of the clothes you buy. How many garments do you find that say "Made in USA"? - But let's not forget one thing. The USA is a heck of a resourceful place.

@Kyle. Having said all that, I have to disagree with you on one thing. A lower dollar will affect Joe the Plumber since many things will become a little pricier on a relative basis. He may still be able to buy beer, but he will be wearing old shirts and old pants. I agree on one thing. There is not much Joe can do about this.

kay · 1 month ago

just browsing. I am not an investor. But "Joe the Plumber" can do something. Vote people into office that will promote a sane monetary policy, and not drive us into complete destruction and financial disaster. The current congress and Obama are creating the demise of this country with the growth of the federal bureacracy ,spending, printing of money , taxing and attempting to overtake our health care system. We will never get over this economically if they are not stopped. Republicans did not do a great job during the Bush years but they never tried to destroy our economy in this fashion. We are headed for disaster. I think that the reason the dollar is losing it's value and also why countries around the world are threatening to use other reserve currencies is because they sense how weak Obama is and they also see that he is purposefully creating chaos and attempting to align himself with dictators and thugs. They do not trust him to get the U.S. back on track, thus they see they must start to fend for themselves. that is why all over Europe socialistic governments are moving to the right. They can't depend on the U.S. to lead the way back to prosperity. I see a weakened U.S. dollar due to the incompetence and egotism of Obama and Pelosi and their minions.

ctreit · 1 month ago

The Washington Post must be reading your blog. ;-) It published this article "Dollar's Slide Gives Rise to Calls for New Reserve" http://www.washingtonpost.com/wp-dyn/content/ar... the day after you published your post. Copycats!

ZFarls · 1 month ago

Fear, Fear, Fear

Gold is the Snuggie of investing. You can buy it on late night TV and it makes you look stupid. Really, look at gold's track record. Also wouldn't you buy gold BEFORE it shoots up and not after?

"You expect it to keep going up"
"China may be one of the riskiest bets of the century"

Stick to telling people to save money by cancelling there cable and bringing their lunch to work. I get that you get alot of hits by making a fancy title called the demise of the dollar but its nothing but FEAR.