Monday, I asked the question, "What will the U.S. dollar be worth in 2010?" I gave the answer that it will be worth considerably less than it is worth...
Monday,
I asked the question, "What will the U.S. dollar be worth in 2010?" I gave the answer that it will be worth considerably less than it is worth today. But how do investors like us profit from it?
More background...
The amount of $7.0 trillion for the financial bailout, the continuing Iraq War, our first annual trillion-dollar deficit and a federal government spending about $3.0 billion more a day than it takes in -- if this is not a recipe for disaster, I'm not sure what is. How long can a currency continue to maintain itself when the government that issues the currency is in such financial crisis?
Depending on what report you believe, the U.S. dollar is the reserve currency for about 70% of world central banks. I see a point where the viability of the U.S. dollar will come into question because of the sheer size of rising U.S. total debt. There could be a huge running away from dollars.
Yesterday, Treasury Secretary Timothy Geithner cemented my opinion on the future of the U.S. dollar when he pledged government financing of up to $2.0 trillion to get banks lending again. Another $2.0 trillion! Where is the money coming from? (Most news reports this morning say that Wall Street didn't like Geithner's news conference because it was short on details. The Dow Jones Industrial Average went down 382 points yesterday.)
The only solution...
The problem that investors face is that there is no paper currency (often referred to as "Fiat Money") alternative to the U.S. dollar. The European economy is in terrible condition. We still don't know if Japan is out of its 20-year run with deflation and China is years away from becoming a truly developed nation.
The only alternative I see for investors is gold bullion. This morning, as I write this column, gold has hit another new price high for 2009 of $925.00 per ounce. A Reuters news story this morning says it best: "Gold rises as investors rush back to haven from risk."
I've been bullish on gold since 2002, have been right since then, and see the metal as the only safe haven left for investors today. Now only if investors would listen. I see the sales of our gold stock newsletters very weak...which tells me that investors have still not taken the price rise in gold seriously. My guess is that only one percent to three percent of investors actually own any gold-related investments. What will happen to the price of gold once the other 97% of investors catch on?
While the rise in price for gold will not be a straight line up (never has been since 2002), at the end of the day I see this metal heading considerably higher than $1,000 an ounce...taking the price of quality gold-producing stocks higher with it.
Profit Confidential
---
http://www.profitconfidential.com/
LOMBARDI PUBLISHING CORPORATION
News, Analysis, and Information Services Since 1986.
One Million Customers in 141 Countries.
Lombardi Publishing Corporation
Financial Publications Division
350 Fifth Avenue, Suite 3304
New York, NY 10118-3304
---
Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever, without written permission from the copyright holder.
