What is the impact of a HUGE devaluationof the American dollar?

[**DONOTDELETE**]

I have a gut feeling that the USA dollar is about to plunge in value. I mean in the next 5 years or so, maybe sooner. It is difficult to predict panics, by their very nature.

Our trade deficits are huge, and with all the dollars outside our nation, when (not if) foreign investers decide to drop the dollar and go to something else (my bet is the Euro), the dollar will collapse in value in a mass rush to cash in dollars to save some value, kind of like an old run on a bank.

I think I am going to start buying gold as a hedge against a collapse. But I really dont know what to do in detail, or waht is going to be the full impact of this, so Ithougt I would introduce it for discussion here if anyone is interested.

Imports would rise in price, and it would benefit farmers. But what else?

Any ideas?

[DesertFox]

It's in no one's interest that the dollar collapse.

[Greymon]

Right. As goes the dollar, so goes the world.

[EagleTed]

The dollar is like any other commodity in the world. The free market should set it's price, without government interference.

If it does a nose dive, then you're probably right about gold being a good investment. But of course, gold doesn't pay interest, or dividends, and it cost money to store.

[DesertFox]

Unless you keep it under your mattress, which has certain drawbacks.

[**DONOTDELETE**]

Well, get ready, 'cause it is gonna happen.

The government has been placating the public with cheap imports since about 1984. this is collapsing American exports, drying up American production, and propelling our manufacturing to leave our shores.

Eventually this balloon is going to pop as soon as some third force causes the US government or large holders of vault money to cash in. The resulting panic to unload dollars will drive the dollar to about a third of its current value.

Maybe then our economic production can make some recovery, who knows?

But USA production does not parralel the 'strength' of the dollar, thus methinks it is artificially high.

[EagleTed]

When you say it will be driven down to one third it's value are you predicting massive inflation at home, or just that Euros or whatever will be worth 3 times as much as they are today?

If that is your prediction why wouldn't you just buy Euros? Open an overseas account in their local currency.

[Rigfire]

I've traded both gold and platinum American eagles for the past six or seven years. I've been able to trade the platinum Eagles several times, making anywhere from $125 to $240 off each platinum coin. I had to hold the gold Eagles for five years before I finally made $40 per coin, when I just sold them recently at $351. Lesson: gold no longer moves much in relation to currency valuations and its only use as a commodity is as jewelry. Platinum, OTOH, is much more highly valued, because it's a commodity that also has an industrial use. I never want to see another gold coin in my life.

[DesertFox]

I've never SEEN a gold coin in my life. /ubbthreads/images/graemlins/smile.gif

[Rigfire]

BTW, investing in commodities in general can be very lucrative in times of extreme dollar valuation swings. Futures in copper, zinc, and even lead will gather you more profit than those rediculous gold coins.

[EagleTed]

[ QUOTE ]
DesertFox said:
I've never SEEN a gold coin in my life. /ubbthreads/images/graemlins/smile.gif

[/ QUOTE ]

I've got a few I'll sell you, DF. Not many, but if you offer
twice the going rate, I'd sacrifice them just for you /ubbthreads/images/graemlins/wink.gif

I know I sound anti-gold, but I'm not. I just don't see
it as a good investment, just something to have in
case all hell breaks loose. Silver's the same way.

[Rigfire]

I'll say this for them. They are sort of fun to hold and jingle in your hands, especially with that relatively heavy weight.

[EagleTed]

[ QUOTE ]
Rigfire said:
I'll say this for them. They are sort of fun to hold and jingle in your hands, especially with that relatively heavy weight.

[/ QUOTE ]

They are pretty. I can see why folks went hog wild
trying to mine it. Of course, it seems to have more
mystic quality than practical.

[DesertFox]

Do they make holes in the bottoms of your pockets?

[EagleTed]

DF, if I started a rumor that gold coins were
good for arthritis the price would double.

I might just do that /ubbthreads/images/graemlins/wink.gif

[Rigfire]

You're right. They are so much more aesthetically pleasing than the platinum Eagles. I know I'd often take out ten or twelve of my gold coins and just sort of play with them. I never even looked at the platinum Eagles, even though they were often worth twice as much.

[DesertFox]

Can you do that with quarters, Ted? I gotsa buncha them.

[Rigfire]

I always kept them in plastic coin holders, except when I was playing with them. The worst part was trying to find a place to hide them in the house--yes, I stupidly refused to put them in a safe deposit box--and then worrying about some slug breaking in, looking in the false bottoms of the old 1960s era Britannicas I eventually did place them in. (Ooops! There goes the secret!)

BTW, the only other place I could think of that was less likely for a thief to look in (which probably means in reality it is the most likely place) was in false bottoms in Bibles--and I couldn't bring myself to mutilate and destroy Bibles for Mammon. That would have been really asking for it.

[EagleTed]

What's the price of platinum now, Rigfire?

And DF, a roll of quarters in your fists will triple your punch, but now that a stamp costs 36 cents, it ain't worth much anymore. I know you grew up when you could go to the Saturday Matinée, buy a coke with a quarter and get a nickel change, but you have to quit living in the past /ubbthreads/images/graemlins/wink.gif

[EagleTed]

False bottom Britannicas, huh? I guess that beats the old boot in the closet hiding place /ubbthreads/images/graemlins/wink.gif

[Rigfire]

Lessee, I'm looking it up right now. Last time I sold, it was in the $580 range. ------ Ok, back. Wow! I shoulda held. I don't have spot prices but the last trade for April platinum was $691.5 and July platinum was $675.

http://www.tfc-charts.w2d.com/marketquotes/index.php3?market=PL

[Rigfire]

BTW, there is a cup and handle on the platinum chart, indicating increased chances for a major breakout to the upside. http://www.tfc-charts.w2d.com/chart/PL/43

[DesertFox]

Ted, when I grew up they hadn't invented the quarter yet.

[**DONOTDELETE**]

Well, ok, buy platinum. Got it.

How about import prices? Much higher?

Currency devaluation to boost local jobs is typical. Mexico devalued its currency deliberately just to do that.

And we are hemoraging US dollars, jobs, capital of all forms to over seas nations, even critical defense plants are being bought by China and moved over there!

Eventually we will have to pay the international debt we are ringing up. We have all these IOUs floating around. We have federal budget deficits that are amazing, if true, coming the next few years, and tons of people close to running out of unemployment, meaning they will get stuck in diminished jobs, making much less money and thereby paying much less in taxes.

I think all it needs, really, is for one calamity to push us over the brink, financially, and al Qaeda might provide it. With no border security and these fanatics hell-bent on revenge, it isnt a pretty prognosis in my book.

And we are still too arrogant to take these folks seriously. I mention things I think possible and people say, 'They're too dumb to do that!' etc. This only increases the liklihood that they will in fact do just that!

Heheh, trade in your tin foil hats for some shiney gold or platinum coins now, before the sky falls on you!

Heheh.

[arthur d]

In theory, if the dollar falls, our industries that get their capital and inputs within the US(or from countries with currencies that didn't appreciate against the dollar(otherwise the costs also rise)) will benefit because it will be cheaper for countries whose currency rose against ours to import from us. This increase of demand for our products should eventually raise the value of the dollar. This of course is just the textbook definition of what should happen.

[Rigfire]

It's not a total investment desert out there. My CRK is doing wonderfully. And the NR I bought just the other day at 4.15 has started to move. I'm even making money off Saddam Hussein: the SPN I bought, with its Wild Well Control division, is just waiting for Hussein to light a match to the wells, and oil service KEG has moved solidly off its lows. There is money to be made in energy, especially if you buy the right, unhedged ng e&p. Don't look now, but there is a severe crisis looming for ng; storage is lower than 2001 and the energy panic, lower than anytime I see stretching back to 1995. Ng might be a solid investement for the next 5-6 years. Check out the storage and drawdowns for yourself: http://www.highlandenergy.com/agatable.htm

[Wallstreetguy]

Clearly the Euro and other major currencies have risen against the dollar lately. Part of the reason is because Europeans are too dumb to lower their interest rates enough. They do not want to look like they are following the US. The EA lowered rates a 1/4 point today which is too little too late. Greenspan & Snow feel that the US is better off with a weak dollar at this time.

Europes reluctance to lower interest rates enough is doing monsterous damage to their economies. Just look at the French and German stock markets. The German Dax (their version of the Dow) has gone from over 8000 in year 2000 to the current level of 2500. No bottom is in sight. The French market is also down big time.

Point being the world economy is in a slump, and our Fed favors a weak dollar. In a short time US will go to war and realize a quick military victory. When this happens Gold will drop, Oil will drop and the dollar will rise. It happens every time................ /ubbthreads/images/graemlins/icon29.gif

[DesertFox]

Welcome to FreeConservatives, Wallstreetguy.

[**DONOTDELETE**]

Umm, Wallstreetguy, we have our quick victory ahnd oil dropped some, and gold is just gold, who knows what it will do next.

But where is the dolalrs rise?

I dont see it.