Why do I think the dollar is in danger? We need to look at the current state of affairs. The center of gravity is the banksters who control the $ (infinite because they can print), politicians/political institutions/political process (elections), media. What do they do with their power? Bubbles, crashes, and economic terror thru unfair taxation, theft during chaos and wars. They use their spying and military machines against their "sheeple". When the crisis comes, will the soldiers and policemen, whose families were financially decimated, follow their order to suppress their countrymen for their justified outcries. I think not. This will be the end for the banksters.
Let's imagine the trajectory of the american dollar. The first is the status quo, meaning everything is going the way it has been. Inflation will constantly erode the purchasing power of this paper. Over time, cost for college tuition, food, gas, healthcare will continuously be going higher and higher at a rate, which is probably greater than 5%. The second is the less than continuous fall due to $-shattering events, such as wars, ebola, economic collapse, etc. Whatever that scenarios the future may unfold, it would seem to make sense to own something that the central bankers cannot print.
1. Precious metals
Gold and silver, which have been around more than thousands of years, should have a better chance out-lasting any paper money. I think it would be wise to own them in the physical form because you have the ultimate control over them. It is not subject to any manipulation or potential madoffication. I dont think the government will dare to confiscate from people individually because it is much easier to cheat thru inflation. The ETF, GLD and SLV, may be good temporarily, but I seriously doubt that they will not be a good idea in the end because they are paper money, which may not have enough physical backing. Also, it is easier for the government to seize their physical metals.
2. Natural Resources
There are two ways that I can see to play this theme. One obvious way is to buy natural resource stocks. The energy sector is the first coming to my mind. There are four types:
- Conventional oil, gas, and coal
- Oil sand
- Shale oil and gas
- Green energy such as solar, wind, bio, geothermal, etc.
The conventional oil and gas producers are challenged in their dwindling reserves, and their heavy exposure in shale investment, which may or may not pay out. Despite of all the hype about shale oil and gas, no companies seem to make any $ (in terms of free cash flow). On the contrary, there were about $35 billion write-downs by majors who rushed in. The majors seemed to be incentivized due to a new SEC accounting change in claiming reserves, which is something they all have trouble in growing. When these companies got the capital to develop within a set time period from their leasing rights, they have to. As a result, they created a NG glut that depressed the price and caused a crash in coal prices. If the shale boom is a bubble, the glut would be temporary.
3. Real Estate
Real estate market is tightly associated with the economic boom and credit (this was why the Chinese real estate market has been so hot of late). The hottest real estate markets in the U.S. are NYC (financiers), DC (politics) and Silicon Valley (digital age). Texas is doing ok because of energy. The oil sand area should do ok considering the future oil investment. Venezuela should be an interesting case study because of her enormous oil reserves, which tops Canada and Saudi Arabia.