You know by now I write a lot about the US dollar and its ongoing abuse. I just lost a friendly bet regarding the dollar. It was trading around 73 this summer and I brashly stated it would see 60 before 80. Brashness is seldom a good idea.

On a longer-term chart, you would see the dollar had never fallen under the 80 level until one year ago. It fell to the 71 range earlier this year but has since climbed back (briefly) above 80. Is this just a “bounce” or a correction in a long-term bear market? Has something fundamental changed about the dollar?

I just lost a friendly bet regarding the dollar. It was trading around 73 this summer and I brashly stated it would see 60 before 80. Brashness is seldom a good idea.

Historic bailouts, failing banks, failing derivatives, unpayable debts and a floundering economy are not supposed to work in the dollar’s favor. Weird things can happen, especially on a short-term basis. I strongly suspect our markets are presently more contrived than ever. Desperate times call for desperate measures. Manipulations fail over the long term, some times spectacularly.

In regards to my recent dollar article, reader “John” poses the following comments and questions…

“I both agree with, and am frightened by, your analysis of the long term value of the dollar. What do you see as solutions? Your mention of other currencies leaves off stronger currencies such as Swiss francs to go directly to gold. In layman’s terms, for a retired man in his mid-seventies with a single million in savings and liquid investments who wants to leave something for his family, how would he protect himself?”

Thank you, John. These are wild and unprecedented times. Many are being caught off guard and presently facing ruin. The problems are nowhere near over. Much more is coming. Protection has seldom been so important.

Avoiding leverage is a key piece of advice. You very likely have no problem there. A dollar and debt bubble has been blown up this decade. It is now unwinding with a vengeance. Those with excessive debt cannot service it and risk losing their assets. They lack liquidity.

The Fed and Treasury are like the little Dutch boy with his fingers in the dyke. Their solutions to maintain the fraudulent status quo are all dollar un-friendly in the long run. Nothing but toxic band-aids are being applied. Nor is there any mainstream discussion of our country’s biggest problems during the present political drama.

If I were to select another fiat currency, the Swiss Franc would certainly come to mind. None of them has substance beyond ‘faith and confidence’ in particular governments and citizens however. Currency diversification is not a bad idea but the precious metals should serve as a foundation. They are on sale right now as tomorrow’s IDE editorial will highlight.

You likely remember, John, a time when standard portfolio advice was to hold 5-15 percent in gold and silver. Gold and silver serve as the “anti-fiats” and are no friends of the paper pushing bankers. Their paper is now turning to mush across the globe.

Gold, silver and the commodities in general have been absolutely hammered as of late. It smacks of a take down but presents an enticing opportunity for accumulation. The COMEX in NY sets the price via their paper trading mechanisms. Just try to find some at the absurd price they have recently set.

There are widespread reports of metal shortages and delivery delays. That is part of the reason for calling this a contrived market. When you can find available silver or gold, you will pay a significant premium over the spot price.

The objective is to get physical positions in your possession. Contracts or claims to metals are suspect at best. Choose a portfolio percentage according to your comfort level.

You can always set up a futures account, buy precious metals, and then stand for delivery at their contrived spot price. Don’t expect an easy go of it if you choose this route. They don’t like people taking away their toys.

When the paper failing hits high gear, people turn to tangible assets… precious metals, numismatic coins, collectables, real estate, art etc… You may want to diversify across several assets. Compare these items to things that have a tendency to go “poof” in hard times- shares in Fannie and Freddie (FNM) & (FRE), Lehman Brothers (LEH), Merrill Lynch (MER), General Motors (GM), Ford (F) or other severely stressed entities. Exotic financial paper issued out of NY is in a bear market.

There is also a fund called Harry Browne’s Permanent Portfolio. This portfolio is designed to steer you safely through a variety of possible scenarios- inflation, deflation, etc. The main goal is to prevent loss of capital. It has worked exceedingly well since inception in 1970. Preservation of capital is set to be a major theme.

Navigate carefully,

Rusty

Source: Solutions for the Sicko Dollar