Is the US Dollar Headed For a Collapse? Gold Prices Seem to Indicate Just That
January 4, 2011 | In: Investing
There is an elephant in the room that no one in Washington or the media wants to talk about these days; that of the impeding collapse of the US Dollar. While Ben Bernanke and the Federal Reserve continues to assure investors that the dollar is a safe investment, while printing like madmen, several indicators seem to suggest otherwise. It isn’t just an academical discussion either. The future of the dollar is of great importance to all Americans, particularly those with savings.
It used to be that the US Dollar was the strongest currency in the world. Those that traveled abroad would experience this first hand as their hard earned money would be highly appreciated by the locals. This just isn’t the case anymore. Several countries now prefer the Euro and many have taken steps to replace their dollar reserves with Euros. The average American citizen may not have felt the impact yet. After all, domestic prices stay the same whether or not the dollar fluctuates, but they will eventually feel the impact as rampant inflation inevitably sets in. As the dollar weakens in purchasing power, it becomes more expensive to import goods, and since much of the US production has been outsourced, this will result in higher prices, which will be passed on to consumers.
Those with savings for retirement invested in American stocks and bonds will be hit the worst. Since their savings are in fixed dollar amounts, once inflation sets in, it’s highly likely that the result will be a net loss as returns struggle to keep up with rise in prices. This is a common scenario and one that has happened many times over the world.
Of course, it is easy, but foolish, to dismiss such talks as fear mongering. However, there is very substantial indication that it is actually true. Take the price of gold for example. Gold has long been touted as a poor investment. Tell that to those who invested in gold around 2000-2001. Where one ounce of gold was worth $300 dollars in 2000, it’s at the time of writing, December 2009, worth $1200. That’s a 500% return on investment. Gold is the anti-dollar investment and has been since the Breton Woods currency system was abolished 40 years ago. Since then, gold has risen in value continuously, skyrocketing in value the last 10 years. Gold is the anti-dollar investment for the reason that gold is the real defacto currency of the world and has been that since mankind first dug up the metal. It does not corrode, fade or burn and it can’t be printed or created artificially. It is the safe haven for all investments.
Why should we be worried that gold has risen so much in value? Essentially, what the market is saying is that it has lost faith in the US Dollar. While the central banks of the world are outwardly discrediting gold, they have actually been buying huge amounts. There is a reason for this of course. The more people hold gold, the less their monopoly on money is worth.
But that is not the only reason to fear for a dollar collapse. Few people know that a new pan-American currency known as the Amero has already been sent into circulation. Open a new browser window and do a Google search for ‘Amero coin pictures’. This is a real currency, which if things continue down the current path, will replace the dollar and enter Americans into a currency union with Canada and Mexico. The then worthless dollars will be exchanged into Ameros at an unfavorable rate.
Does all this sound far fetched to you? Don’t take my word for it. There are several influential people who do their best to warn the American public of this scenario. Two of those people are Congressman Ron Paul and hedge fund owner and soon to be Senator Peter Schiff. Peter Schiff, owner of Euro Pacific Capital, predicted the current financial crisis several years before it happened. Now he and Congressman Ron Paul are predicting the collapse of the US Dollar and doing their best to tell the American public about it.
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