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.
Another interesting point is that there are some evidence that the SLV, silver ETF, was manipulated from traders, and mining CEOs. Silver potentially can be a better investment than gold.
One can also explore the possibility of owning gold and silver mining stocks. A good research is definitely needed.
Eric Sprott's
Sprott Gold & Precious Minerals Fund:
Top Ten Holdings
- Osisko Gold Royalties Ltd.
- Pan American Silver Corp.
- Guyana Goldfields Inc.
- Kirkland Lake Gold Inc.
- Pretium Resources Inc.
- Tahoe Resources Inc.
- Silver Wheaton Corp.
- Alamos Gold Inc.
- Torex Gold Resources Inc.
- Asanko Gold, Inc.
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
- Coal
- Shale oil and gas
- Uranium
- Green energy such as solar, wind, bio, geothermal, etc.
The conventional oil and gas producers are challenged with 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.
The oil sand is the only economically viable source of non-conventional oil production, as far as I know today. Canada is also a politically stable country and an ally to the U.S. Suncor, for instance, is a big player there. SU has been paying a dividend and has been buying back shares, in sharp contrast to shale players. There are other companies like SU, but I need to do more research.
Coal companies are depressed by the glut in NG, import from Columbia, and weak economy. The top producers BTU, ACI and ANR all face liquidity issues in a year or so. I do expect the eventual recovery, but they may not survive this current downturn.
The shale oil and gas market today is a bubble in my opinion. It was evidenced by the $35 bln write downs and fate of FST (Forest Oil). Here is a link:
http://www.globalresearch.ca/the-fracked-up-usa-shale-gas-bubble/5326504
Uranium should be very interesting because of the low prices, global conflict (restocking of nuclear weapons?) and increasing energy demand in general. Need some research.
The oil sand is the only economically viable source of non-conventional oil production, as far as I know today. Canada is also a politically stable country and an ally to the U.S. Suncor, for instance, is a big player there. SU has been paying a dividend and has been buying back shares, in sharp contrast to shale players. There are other companies like SU, but I need to do more research.
Coal companies are depressed by the glut in NG, import from Columbia, and weak economy. The top producers BTU, ACI and ANR all face liquidity issues in a year or so. I do expect the eventual recovery, but they may not survive this current downturn.
The shale oil and gas market today is a bubble in my opinion. It was evidenced by the $35 bln write downs and fate of FST (Forest Oil). Here is a link:
http://www.globalresearch.ca/the-fracked-up-usa-shale-gas-bubble/5326504
Uranium should be very interesting because of the low prices, global conflict (restocking of nuclear weapons?) and increasing energy demand in general. Need some research.
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.
4. Optimism
The change is inevitable because the current course is not sustainable.
- Ron Paul has won the hearts and minds of people. He is still there.
- U.S. war machine has serious challenges abroad against Russia and China, but also at home where people have doubts. Back in WW2, Germany and Japan were on the rise in every aspect. They could not win the war. Despite of the war mongering propaganda, I dont think people really want to go to wars. I also believe the U.S. population is split on wars because too many people know better. Even the top may be split on how to proceed. In addition, the U.S. allies are certainly not in favor of wars against Russia because Europe can be obliterated in the process. The war machine is full of cracks right now. Bribing and blackmailing a few puppets may not be enough. Other dirty tricks like false flag operations may not sustain it either. The disadvantage factor is that the U.S. war industry is profit oriented, so there is a lot of over-charging at best and corruption at worst.
- There is the internet, which gives people an alternative media, and voices. You dont need to win 100% of the population, but just enough critical mass and the rest will follow.
- The drug war is ending, so there is a chance the U.S. society will become more civil.
- The economic reset is inevitable. There is a great opportunity to build something new, but the process can be very painful.
