Sunday, December 20, 2009

Fjordman: On the Collapsing US Dollar

Fjordman’s latest essay, “On the Collapsing US Dollar”, has been published at Atlas Shrugs. Some excerpts are below:

The price of gold will probably continue to rise. Investors buy precious metals because they no longer trust many currencies, above all the US dollar, and they are right to distrust the dollar. Although the price of gold has already risen significantly, the expatriate American investor Jim Rogers believes this is not a bubble since virtually nobody still owns gold. As a friend of mine comments, “I think gold is going to hold the level for a while now, for some months bordering to half a year. Then, due to the money-printing, the sky will be the limit.”

I have heard several people who are into precious metals state that silver is currently preferable to gold, and platinum may be a good bet as well. Exactly which precious metal is better I will leave to the experts, but a combination of all three might be sensible, in addition to property or other assets. This could be one of the few cases where “diversity” really is a good thing. An ancient and time-tested advice is to never put all of your eggs in one basket.

According to blogger Dennis Mangan, “While predictions are difficult to make, especially about the future, Williams marshals the facts that support his analysis. Runaway government spending, aided and abetted by massive printing of dollars by the Federal reserve, have doomed the dollar. It is only a matter of timing. A hyperinflation will be accompanied by political upheaval and, in my opinion, could see the end of the U.S. as we know it. What shape that upheaval would take is anyone’s guess.”
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Not all observers agree that the USA is facing a hyperinflation; there are those who believe the result will rather be a serious deflation. Whatever will be the end result it is quite evident thatthe United States is now headed for turbulent times, financially and politically. Since ethnic diversity is rapidly increasing and national cohesion is decreasing correspondingly, a Second American Civil War could be considered one of several possible outcomes.

Frankly, I suspect that more or less the entire Western world is heading for serious financial instability and Multicultural tribalistic violence in the coming generation. The most important thing that the common man can do in such turbulent times is to be mentally and physically prepared to protect the life and property of his family as best as he can until the dust settles. This includes having guns and ammunition as well as money. All things considered I believe that Americans and Westerners in general would be smart to invest some of their savings in metals as soon as possible, starting with gold, silver and lead, not necessarily in that order.

Read the rest at Atlas Shrugs.


Anonymous said...

The US is bankrupt. It's time for them to admit it. The US government has unfunded obligations in excess of 80 trillion dollars. The dollar is worthless and will become worthless when every other nation on Earth will stop bailing the US out by lending them money.

Oh, all assets in the US are overpriced - housing and stocks. Stocks have horrible PEs and so on. The US economy has horrible fundamentals too. When the Chinese, Japanese and Saudis will depeg their currencies, which is the smart thing to do for them, no US consumer will afford anything close to what they're buying now and 70% of the US economy will disappear along with that.

We can thank the US government for the 1965 immigration bill that destroyed the US culturally and everything they did since Roosevelt for the US bankruptcy.

Henrik R Clausen said...

Having the courage to actually declare the bankruptcy would be the honorable thing to do. But it seems that everyone in charge of it are running circles around the obvious.

Lyndon B. Johnson and Great Society did great harm. But so did Roosevelt and the assault on money.

One_of_the_last_few_Patriots_left said...

Thank, you, Fjordman, for your sound advice. I too have been thinking along these lines for some time now, having seen with my own eyes the effects of hyperinflation in Poland in 1991.
Let me suggest to GoV readers that you do a google search for NorthWest Territorial Mint, or type in "NWMT silver bullion" and hit search. Some months ago, I purchased two 100 ounce silver bullion bars at about $1,500 each (Ouch!) but they are currently worth about $1,800. Of course, the silver bars have not changed, whereas the dollar.....
For a long time, I too have been recommending to my friends that they also invest in "brass."

Henrik R Clausen said...

Kitco has a nice selection of bullion products at reasonable prices, ncluding my favorite, the Austrian silver Philharmonica. They ship to North America without problems.

Getting silver at a decent price in Europe is more difficult, though, due to EU tax laws.

X said...

There are other possibilities, though it relies on spending a fair bit of money to start with. Enough to wipe out the text costs in some ways.

Travel to Argentina or Paraguay, buy silver, travel back. It's cheap as dirt over there and even cheaper as bullion.

The trick is not to declare it. Of course they'll zap you if you don't declare it and they catch you out... but you can just say that you like silver and, as long as it's not intended for sale, there's nothing to actually get you for.

xlbrl said...

There are three possible reasons the metals have not soared as they might reasonably be expected to.

One, the public is very slow to change long held custom.

Two, in spite of everything, the world wishes the dollar to remain the world's currency, because there is nothing yet to take it's place. There are no volunteers.

Three, Roosevelt simply made it illegal to own gold once when it suited him, and it is not impossible that could happen again internationally. We have seen that world-wide coordinated nonsense is increasingly ambitious in scope.

If gold does become a fabulous store of value, you can be sure it will be a target of politicians.

Conservative Swede said...

There is a way to buy silver without VAT, and that's through

Henrik R Clausen said...

CS, another good way is to purchase used silver cutlery, which is VAT-free. You may (or may not) then pay to have it purified to become fine silver. Purification costs VAT, but the metal you get without.

It's legal and just fine.

Unknown said...

In my opinion the US government has been throwing around such a large amount of money at the problems that it's temporarily stabilized the economic system and at least some of the housing markets. But this comes with a lot of consequences, and the current expansion of the money supply is not sustainable because it will severely damage the value of the dollar and create a significant inflation problem in a due time. That's why I still feel gold is one of the best asset classes to invest in currently given its safe haven status and that it is denominated in dollars. And here is a very interesting article on these issues Canada Gold Investing 101 on the top left of the page, which analyzes the relationship between the dollar, the gold price, and gold mining companies as a result of the Federal Reserve's easy monetary policies. I thought it was especially helpful for investors to read to get a better sense of the dynamics between the various sectors of the financial markets to improve their investment knowledge.