Dollars Gold
Hedging the Dollar With Gold
Gold is the premier monetary and chaos hedging asset of the world. During times of geopolitical tension, times of war, financial turmoil and global uncertainty it has a direct response. In the future gold will go much higher because globally and within the US there is too much spending, the Federal Reserve and the banks are printing too much money. Rising global inflation, a weak US Dollar, international tension like whats going on in the Middle East and India's and China's explosive economies are other factors that have a direct effect.
If you watch the markets then you will see that gold, silver, oil, commodities and other tangible assets tend to rise together, they're contra-cyclical to paper financial assets for 2/3 of a cycle. When stocks are doing well, then gold prices don't move and when stocks are flat to negative on their rate of return in other asset classes, gold performs very well. People tend to step back from other financial assets and say, until the risk reward relationship is fair and even, I'd rather protect than speculate. That's why, for 2/3 of the business cycle it is contra-cyclical.
Gold rose roughly 158% in the last six years, silver went up about 246% and while the Dollar fell 32%, up went gold stock by 300%. Compair the the Dollar today to the Dollar in 1870 and it is only worth 1cent and compaired to the Dollar in 1919 it is only worth 2cent and the largest drop in the Dollar, since it has been unhinged from gold, has been since the 1970's. There has been a long term decline of the Dollar since the birth of the Federal Reserve in 1913, ending over 100 years of Dollar price stability. The US is now running a total annual budget and trade deficits exceeding $1.5trillion Dollars and the Federal Reserve is creating annually $1-2 trillion Dollar liquidity out of nothing which has a massive effect on things like the DOW JONES INDUSTRIAL AVERAGE, the DOWN JONES TRANSPORTATION AVERAGE and the DOW JONES UTILITY AVERAGE which have all been moving well since 2001 -2002 however, when you divide their price performance by the gold price, which I beieve is real money, you have downward trends in all three averages of the DOW JONES.
So here we have it, US debt has grown 5.5 times, roughly, since 1980 from $8 trillion to $44 trillion which is the biggest debt explosion in world history.
How do we deal with this massive debt? One way to pay it off is to raise taxes. WE have seen that before and we will see it in the years to come. They can print money as in Weimar Republic Germany after World War II. They could sell off by privatizing National assets such as telecommunications, transport, water systems or real estate. Just as Russia rejected $110 billion, so could they reject the debt. Finally, they could simply resort to plunder by launching wars to acquire wealth such as the Roman Empire did, the Spanish Empire did, the Nazis did and the Japanese.
Large Dollar holders are now beginning to exit the Dollar since the latest decline. The Dollar became the world's reserve currency in 1944, everything had to be related to Dollars, most international transactions were denominated by the US Dollar for the next 62 years giving America huge financial power economically and politically. The United Arab Emirates announced that it would cut its Dollar holding in half in October 2006 and Japanese life insurers with $1.6 trillion in managed assets announced they were to diversify out of their Dollar holdings. Central banks all across Asia (South Korea, China, Japan, Taiwan and Hong Kong) have all started to diversify out of Dollars. China with $1trillion in foreign currency reserves has begun to diversify out of its $700billion and to cut back on its purchases of U.S. Treasuries. Russia too has cut its Dollar holdings from 70% to 40%; Sweden cut its Dollor reserves from 37% to 20% and Italy cut theirs by 21%. China is pushing the world to rely less upon the Dollar for world trade.
If foreign banks holding roughly $2.94trillion of U.S. Dollars were to diversify even 10% of their assets, you'd see $294 billion dumped into the market. 20% diversification would make $588 billion thrown out there which has a very negative effect on the Dollars value and of course interest rates would rise.
Foreign commercial institutions like insurance companies, banks, hedge and pension funds hold between $7-8 trillion in U.S. Dollars. Again any diversification away from the Dollar will have the same effect of rising interest rates and inflation through the roof. The Euro is now taking the place of the Dollar, many of the world's oil transactions have begun to be made in Euros. In mid 2006, the IMF director for the Middle East and Central Asia urged Persian Gulf countries to peg their currencies to the Euro instead of the Dollar. Worldwide the Euro is in greater circulation than the Dollar and so it is large enough to enable it to become the reserve currency of the world. Foreign Dollar holders are now switching to Euros, British pounds, Swiss Francs and other strong currencies, into gold and other commodities such as oil and minerals.
So as the Dollar collapses, gold has risen. They tend to move in the opposite direction if they aren't attached. Over the last 36years, the US Dollar has declined 80%, while gold has risen 1900%. Today it takes five times more of the Dollar to buy the same amount of goods or services than in 1971.
In the end we can see that against a depreciating Dollar, gold is the perfect hedge.
About the Author
In these time of a failing Dollar, reaching to something solid like gold, silver or platinum is a great way to secure your future. Visit my website at http://www.wheretobuy-gold.com for resources and information. Also my new blog which is at http://howtobuy-gold.blogspot.com/
Thank you for your time!
Million Dollar Gold Mercedes
|
|
American Weigh 600 Gram Jewelry Scale $5.99 Product FeaturesTenth of a gram accuracy (0.1g)600 gram Maximum CapacityFlip-Open Protective CoverIncludes two AAA batteriesPlatform Size: 2.5 x 3.0" The American Weigh 600 is a compact pocket scale for those who are seeking on go portability and durability. The backlit LCD display helps make the numbers viewable and easy to read. The intuitive protective cover provides protection for the scale. S... |
|
|
Hamilton Beach 80675 Permanent Gold Tone Filter, 8 to 12-Cups $0.01 8 - 12 cup permanent gold tone filter... |
|
|
Hamilton Beach 48465 Brewstation Summit Ultra 12-Cup Programmable Coffeemaker $69.99 Insulated tank help prevent heat and flavor from escapingVersatile brewing choose from bold regular iced coffee or small-batch options1-hand dispensing with non-slip dispenser bar no carafe no pouring no spillsAdjustable automatic shut-off; customizable from 0-4 hours24-hour digital clock with programmable clock and auto-start timerNo hot plate to scorch coffee flavor8 11/32" W x 16 3/4" H x 9 1/4... |
|
|
The Good, The Bad & The Ugly (Expanded) $5.74 The concluding chapter of director Sergio Leone's epochal Man With No Name trilogy ushered film scorer Ennio Morricone into the pop mainstream courtesy of a hit cover of its main title by American Hugo Montenegro. More importantly, it both showcased the composer's spectacularly inventive range and set him up for even greater triumphs to come with Leone and others. But aficionados of il Maes... |
|
|
Ennio Morricone: The Complete Dollars Trilogy $6.87 All products are BRAND NEW and factory sealed. Fast shipping and 100% Satisfaction Guaranteed.... |
|
|
Way Out West $14.00 All products are BRAND NEW and factory sealed. Fast shipping and 100% Satisfaction Guaranteed.... |
|
|
Complete PuriTEST Metals Testing Kit with Digital Scale, Stone, File, Gold Loupe and Free 5gr Solid Silver Bar $28.99 This is the perfect testing kit for anyone who handles precious metals. Includes 10k, 14k, 18k, 22k, Silver and Platinum Solutions (1 bottle each). Each bottle contains 1/2 fluid ounce (0.5 fl oz) test acid. Test stone measure 2 inches x 2 in. DigiWeigh 600BL scale weighs in Grams (g), Ounces (oz), Carats (ct), and Grains (gr), and includes Lifetime Warranty. FREE solid silver bar is 5-grains of f... |
|
|
Frost Cutlery & Knives SETPRES08 Commemorative Coin Series - Presidential Gold Dollar Set $38.27 Frost Cutlery & Knives - Commemorative Coin Series - Presidential Gold Dollar Set. Model: FSETPRES08. Honors four presidents: James Monroe, John Quincy Adams, Andrew Jackson and Martin Van Buren. Set includes 4 1/8" closed trapper with 440 stainless clip and spey blades. Blades feature commemorative etching. Blue smooth bone handles with fluted nickel silver bolsters and commemorative inlay shield... |
|
|
Wall Street II Pen - Crushed American Dollars - Gold $29.95 Wall Street II Pen - Crushed American Dollars - Gold Item Stock Number - Logs To Lumber Exotics Satisfaction guaranteed or you can return it for a full refund including shipping both ways (USA shipments only)- other sizes and quantities are available!! Pictures: Multiple item pictures will depict a representative image of the product you will receive. Individual items will contain a picture of ... |
|
|
The Good, the Bad and the Ugly (Two-Disc Blu-ray/DVD Combo in Blu-ray Packaging) $10.98 If you think of A Fistful of Dollars and For a Few Dollars More as the tasty appetizers in Sergio Leone's celebrated "Dollars" trilogy of Italian "Spaghetti" Westerns, then The Good, the Bad, and the Ugly is a lavish full-course feast. Readily identified by the popular themes of its innovative score by Ennio Morricone (one of the bestselling soundtracks of all time), this cinematic milestone eclip... |