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| Ben Twilly |
hey everyone
How do I hedge against the inevitable decline of the dollar. Do i but shared in GLD
What about sgol? |
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| Krypton |
| You could buy gold but why would you buy anything at record highs? Goes completely against the buy low sell high logic. Instead you could buy foreign stocks (outside the USA). Or buy American stocks which have huge business overseas, like Coca Cola (just an example). Another thing you can do is buy other currencies like the Euro. If the dollar goes down against the Euro like its doing, then that means less Euros buys more dollars. |
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| Capitalizt |
Gold isn't at an all time high krypt. The dollar is at an all time low. ;) And remember while it is at a price record, in order reach its inflation-adjusted peak it needs to go to $2,300+. Silver is still a great value in my opinion. It actually needs to hit $120+/oz to beat its inflation-adjusted high..and even if it doesn't quite get there, the historical silver to gold price ratio is 16:1..and to hit that it needs to rise to $65/oz, which is roughly a 400% gain from these levels.
| quote: | Originally posted by Krypton
Another thing you can do is buy other currencies like the Euro. If the dollar goes down against the Euro like its doing, then that means less Euros buys more dollars. |
I wouldn't do that.. You have to realize that all major countries are on the same monetary path. They all have fiat systems and are all printing money like crazy. It's true that the dollar may fall more than other currencies since we are on a slightly more insane fiscal/monetary path, but until the world economy improves and central banks start hiking rates dramatically, the value of all paper currencies are likely to fall in value against other assets (gold, silver, oil, stocks, and property). I expect all of these assets (even housing) to rise significantly in price over the next few years..but this won't necessarily be because the economy is booming with healthy growth. It will simply be a reflection of the reduced purchasing power of our money.
My recommendation..Hold a well diversified portfolio containing a little bit of everything EXCEPT those little paper rectangles we call "money". They are the only asset guaranteed NOT to protect you from inflation. |
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| Kinezi |
To hedge against falling Dollar, invest in Iraq.
To hedge against rising Dollar, invest in Weed. |
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| Krypton |
| quote: | Originally posted by Capitalizt
Gold isn't at an all time high krypt. The dollar is at an all time low. ;) And remember while it is at a price record, in order reach its inflation-adjusted peak it needs to go to $2,300+. Silver is still a great value in my opinion. It actually needs to hit $120+/oz to beat its inflation-adjusted high..and even if it doesn't quite get there, the historical silver to gold price ratio is 16:1..and to hit that it needs to rise to $65/oz, which is roughly a 400% gain from these levels. |
The $2300 inflation adjusted number the gold bugs keep talking about is a completely artificial price level reached only because two speculators in the 1970's tried to corner the silver market. The Hunt Brothers were duly prosecuted by the Federal government for price manipulation. Now, unless you want to tell me someone is trying to corner the silver or gold market, this $2300 price level means absolutely nothing.
| quote: | I wouldn't do that.. You have to realize that all major countries are on the same monetary path. They all have fiat systems and are all printing money like crazy. It's true that the dollar may fall more than other currencies since we are on a slightly more insane fiscal/monetary path, but until the world economy improves and central banks start hiking rates dramatically, the value of all paper currencies are likely to fall in value against other assets (gold, silver, oil, stocks, and property). I expect all of these assets (even housing) to rise significantly in price over the next few years..but this won't necessarily be because the economy is booming with healthy growth. It will simply be a reflection of the reduced purchasing power of our money.
My recommendation..Hold a well diversified portfolio containing a little bit of everything EXCEPT those little paper rectangles we call "money". They are the only asset guaranteed NOT to protect you from inflation. |
The question here was hedging against a devaluing dollar. Buying currencies in which the dollar is falling would be one such strategy. We'r not talking about long-term holding of currencies. This guy looks like he wants to trade the currency movements. And to buy any asset at its record high is utterly ridiculous and a pervasive view when an asset bubble is in the works. Gold certainly has the hallmarks of a commodity bubble. |
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| Capitalizt |
The Hunt Brothers tried cornering the silver market, not gold. To do that they would need a few trillion. ;)
And krypt, for gold to be in a "bubble" today, you must assume that the dollar is artificially suppressed or that it has fallen below where the fundamentals suggest it should be. Do you really see that? I don't.. In fact, unless the fed gets rates back up to 5-6% to offer some protection to the greenback, I see no reason at all for it to rise against commodities. Look at the debt load of the country and the inevitable amount of printing that will need to take place to finance it. The $900 billion healthcare entitlement you are hoping for will only make things worse when it passed. Given the macro situation and the increase in the number of dollars floating around, why the heck should the dollar go UP in value against anything that has a relatively fixed supply? It's true you can recommend trading currencies..but that trade is really based on the faith you have in various governments to do the right thing and strengthen their currencies..which is a risky business IMO. If you want to bet against the dollar, it seems to make more sense to invest in something that is both highly desired and whose supply you KNOW is limited in quantity and can't be increased on a whim. If you are afraid of buying gold at these levels, look at the other commodities or a commodity index containing agriculture, oil, natural gas, base metals, etc. econ 101: fixed supply of goods + increasing supply of dollars = higher price of goods. It's inevitable :) |
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| Krypton |
| quote: | Originally posted by Capitalizt
The Hunt Brothers tried cornering the silver market, not gold. To do that they would need a few trillion. ;) |
Both metals trail each other. Silver usually trailing gold. But if silver's price is exploding, so will gold. They didn't need to corner the gold market. Again, this $2300 price level is 100% fake, artificial, it's not going to happen for years, probably a decade or more, to come unless it's cornered again (illegal), World War III, or complete and total economic collapse of the USA (which isn't happening). The spikes in silver because of the Hunt Brothers in 1980, and gold doing the same, you can't possibly tell me, "Oh gold didn't spike at exactly the same time silver did because the Hunt Brothers didn't corner gold!"...You know exactly why gold spiked at $2300 inflation adjusted and you know it's totally fake. What you see right here is a commodity bubble in the works. I'm not saying gold shouldn't be rising. I'm saying gold is way overbought.
Gold spiking at exactly the same time as the silver cornered by the Hunt Brothers...No way you can tell me gold didn't rise because of the Hunt Brothers.
| quote: | | And krypt, for gold to be in a "bubble" today, you must assume that the dollar is artificially suppressed or that it has fallen below where the fundamentals suggest it should be. Do you really see that? I don't.. In fact, unless the fed gets rates back up to 5-6% to offer some protection to the greenback, I see no reason at all for it to rise against commodities. Look at the debt load of the country and the inevitable amount of printing that will need to take place to finance it. The $900 billion healthcare entitlement you are hoping for will only make things worse when it passed. Given the macro situation and the increase in the number of dollars floating around, why the heck should the dollar go UP in value against anything that has a relatively fixed supply? It's true you can recommend trading currencies..but that trade is really based on the faith you have in various governments to do the right thing and strengthen their currencies..which is a risky business IMO. If you want to bet against the dollar, it seems to make more sense to invest in something that is both highly desired and whose supply you KNOW is limited in quantity and can't be increased on a whim. If you are afraid of buying gold at these levels, look at the other commodities or a commodity index containing agriculture, oil, natural gas, base metals, etc. econ 101: fixed supply of goods + increasing supply of dollars = higher price of goods. It's inevitable :) |
Let's see...
1) Gold commercials all over the tv, internet, and radio. Check.
2) Gold euphoria in the market. Check.
3) Belief gold price will reach an astronomical high level without even contemplating its feasibility. Check.
4) Gold rising many times more than the dollar falling. Check.
5) Rampant speculation in gold. Check.
6) Gold repeatedly reached record highs. Check.
7) Practically no sellers in gold relative to buyers. Check.
8) Still in a deflationary environment. Check.
9) Gold consumption substantially reduced. Check.
Number 9 number 9. Just like oil's bubble. Actually use of gold is down substantially. Hmm, but speculation and trading of gold is up huge. Sounds bubblish.
The below chart is gold and the dollar. The yellow line is gold, the blue line is the dollar. As you can see, gold have risen far more than the dollar has fallen. And you must conclude that the yellow and blue lines will meet once again. To believe that gold will go up in perpetuity is to demonstrate the very mentality that makes asset bubbles possible.
We get it. The dollar is gradually devaluing. That doesn't justify gold going into the stratosphere. |
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