us dollar Archives - Zenconomics

Risk Update: Belief That Gold Will Fall When the Dollar Climbs

by Jeff Clark – Hard Assets Alliance :

Gold and the US dollar typically exhibit an inverse relationship—when one climbs, the other tends to fall. But that relationship disappeared over three months ago.

Why the new romance between gold and the dollar? Primarily because what has been supportive for the dollar has also been good for gold.

This trend should continue. I’m not the only one to think so:

• “The resilience of gold in the face of a surging dollar and collapsing oil price supports our view that the precious metal will recover further this year and next.” (Capital Economics head of research Julian Jessop)

Do you believe there is greater or lesser risk in the financial markets? Will there be more or less fear in the world in 2015?

If you suspect that ever-optimistic government figures are masking far uglier truths… if you understand that the US economy depends on the global economy for far more than exports… if you believe the truly historic amount of money printing in the US and around the world must eventually result in inflation… or if for any reason you doubt that 2015 will be rosy, then the best investment strategy is one that includes a meaningful amount of gold bullion.

Remember: The issue is not inflation vs. deflation, the USD vs. euro, or even supply vs. demand. It’s fear and chaos vs. confidence and stability. Whichever of these you see as the stronger trend in the years ahead should drive your action plan.

In our view, the response we’ve seen thus far in gold has been a small foretaste of the major move we can expect when the wheels come off the global financial system, whatever form that may take.

My friends, buffer your investments and way of life against a growing level of financial risk. I urge you to continue adding low-cost bullion to your Hard Assets Alliance account.

Article originally posted in the February issue of Smart Metals Investor at HardAssetsAlliance.com.

Personal Secession: Ideas for Opting Out

by Jeff Deist – Mises Daily:

So in closing, let me make a few humble suggestions for beginning a journey of personal secession. Not all of these may apply to your personal circumstances; no one but you can decide what’s best for you and your family. But all of us can play a role in a bottom-up revolution by doing everything in our power to withdraw our consent from the state:

• Secede from intellectual isolation. Talk to like-minded friends, family, and neighbors — whether physically or virtually — to spread liberty and cultivate relationships and alliances. The state prefers to have us atomized, without a strong family structure or social network;

• Secede from dependency. Become as self-sufficient as possible with regard to food, water, fuel, cash, firearms, and physical security at home. Resist being reliant on government in the event of a natural disaster, bank crisis, or the like;

• Secede from mainstream media, which promotes the state in a million different ways. Ditch cable, ditch CNN, ditch the major newspapers, and find your own sources of information in this internet age. Take advantage of a luxury previous generations did not enjoy;

• Secede from state control of your children by homeschooling or unschooling them;

• Secede from college by rejecting mainstream academia and its student loan trap. Educate yourself using online learning platforms, obtaining technical credentials, or simply by reading as much as you can;

• Secede from the US dollar by owning physical precious metals, by owning assets denominated in foreign currencies, and by owning assets abroad;

• Secede from the federal tax and regulatory regimes by organizing your business and personal affairs to be as tax efficient and unobtrusive as possible;

• Secede from the legal system, by legally protecting your assets from rapacious lawsuits and probate courts as much as possible;

• Secede from the state healthcare racket by taking control of your health, and questioning medical orthodoxy;

• Secede from your state by moving to another with a better tax and regulatory environment, better homeschooling laws, better gun laws, or just one with more liberty-minded people;

• Secede from political uncertainly in the US by obtaining a second passport;

• Secede from the US altogether by expatriating.

• Most of all, secede from the mindset that government is all-powerful or too formidable an opponent to be overcome. The state is nothing more than Bastiat’s great fiction, or Murray’s gang of thieves writ large. Let’s not give it the power to make us unhappy or pessimistic.

All of us, regardless of ideological bent and regardless of whether we know it or not, are married to a very violent, abusive spendthrift. It’s time, ladies and gentlemen, to get a divorce from DC.

Article originally posted at Mises.org.

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Investors Are Coming to Grips with Reality

by Justin Spittler – Hard Assets Alliance:

Today’s financial markets have acquired a knack for ingesting bad news without so much as a hiccup. Lately, that same resiliency—or more appropriately, complacency—has come under pressure.

After lying dormant for months, volatility has come storming back with a vengeance. Investors are finally coming to their senses—much to the delight of the precious metals community.

Patience Wearing Thin

The problems facing the global economy didn’t come out of nowhere. It just took a jolt of volatility to put them in the spotlight—and you can thank the soaring US dollar and the collapse of energy prices for putting investors on high alert.

Of course, there are perks to a strong dollar and cheap energy. A strong dollar makes imported goods more affordable for American consumers, while it’s estimated that weak oil prices will put roughly $500 into the wallet of the average American driver. While neither is positive for precious metals, the euphoria won’t last long.

An appreciating US dollar makes American exports less competitive. Depressed oil prices could cripple the domestic energy revolution, which has been the backbone of the US recovery. The breakout of the dollar also threatens to derail commodity-centric emerging markets, particularly nations that have relied on cheap credit for growth.

Monetary Tools Becoming Dull

The precarious state of the global economy doesn’t just have investors on edge. Policymakers in countries across the globe face a dilemma: risk an economic crash by stepping away from their maligned economies, or provide their debt-addicted with another dose of stimulus. It’s a lose-lose situation.

Yet it’s a no-brainer for central bankers, whose greatest fear is deflation.

The situation is no different in the United States even though the Federal Reserve ended its quantitative easing program in October. Remember, the Fed has said it will be “patient” in raising rates; and you can bet Yellen will fire up the printing press the second that the US economy shows symptoms of flatlining.

Unfortunately, the next round of stimulus won’t be as effective as previous installments, and investors seem to be waking up to that harsh reality.

Perceptions Change; the Case for Gold Stays the Same

As an analyst, I spend most of my days sifting through data, crunching numbers, and gathering different perspectives in an attempt to gain clues about the future. And yet, I’ll be the first to admit that economic forecasting is a silly process. Nonetheless, my feeling is that gold has hit a bottom.

That’s probably something you’re sick of hearing. Some in the precious metals community have been calling an end to the gold market rut for months… others for much longer.

Why do I think that this time is different? It has little to do with fundamentals. The case for owning gold has changed little recently, although we’re receiving more and more reminders. What’s changing is the perception of Western investors.

After witnessing unconventional monetary policies push financial markets to new heights, investors seem to be losing faith in this grand experiment. This uneasy feeling is starting to bring them back to gold—the most crisis-proof asset of all.

Luckily, there’s still an opportunity for investors to pick up gold while incurring little downside risk. There are few sellers at today’s prices, and those holding gold are what I like to call “strong hands.”

Even if gold hits a few speed bumps throughout the year, investors will sleep easier knowing that some of their wealth is held in the most time-tested of all assets.

Article originally posted in the January issue of Smart Metals Investor at HardAssetsAlliance.com.