Questions: Positioning for a Possible Currency Collapse

[Mike03]

The dollar apocaplyptics (of which I am one) have been theorizing about what might trigger the collapse of the currency. I’m wondering if that process began November 3.

Is it fair to say that if Asia and the UK were to stop purchasing U.S. equities at their current pace that this could put our economy into free fall?

Question: What would the motivation be for Asia and the UK to continue to purchase our treasuries, since there is no confidence in our ability to repay our obligations? The re-election of Bush would seem to say to the world, “Deficits don’t matter and we will continue to spend without a care in the world.” Unless there is something I’m not seeing, why should other nations invest in the U.S. at this point?

Question: What effect would it have on the U.S. economy and Dollar if China were to unpeg its currency from ours?

Last question: Regarding this ongoing debate between the hyper-inflationists and the deflationists, any guesses on who is right? I’ve been told deflation is “out of the question” but there are some bright people who say it is possible.

Is anyone here strategically hedged against the collapse of the dollar, and do you have any strategic advice for others? I’m invested in funds that are inversely correlated with the dollar, and in precious metal stocks, but I’m worried this is not enough. I'm thinking of allocating more of my portfolio to these instruments, but worried it could be a mistake. I’m quite anxious about this and would appreciate opinions and advice.
Thanks,
Mike

[Jerseygirltoo]

1. not advice but another question

Mike, do you know where I can open a bank account in Euros?

[Trailrider1951]

3. Do you want real money?

Buy gold and silver. They are the only real money. Paper, no matter where it is from, is still just paper. If you don't have the big $$ to buy ounces at a time, just spend what you can afford to buy bulk bullion coins, a little at a time. If you have an IRA, you can buy American-made gold and silver coins and fund it that way. See this website for information:
www.americanira.com

[movonne]

2. What about gold coins....and could that help????

[ret5hd]

4. kick...so i can find this later (nt)

[RawMaterials]

5. swiss bankaccount would allow you to hold your money in eruos n/t

[whirlygigspin]

6. HSBC let's you keep your money offshore

n/T

[movonne]

7. What is HSBC????

[Jerseygirltoo]

15. It's an Intl banking corporation

HongKong Singapore Bank Corp. I sent them an email this afternoon asking about Euro accounts

[movonne]

8. How do you get a swiss bank account???

[German-Lefty]

9. answers

Is it fair to say that if Asia and the UK were to stop purchasing U.S. equities at their current pace that this could put our economy into free fall?
If the other countries of the world boycott the US the economy your economy is doomed, or would have to shrink 70% to fit your own oil resources. That's the worst case scenario.
If they would stop buying US debt and stop investing money in the US private sector, the dollar will start to fall. This will make people not want to loan money to us at low interest rates, so we'll have to pay off debts, balancing the budget with big taxes and spending cuts. The manufacturing sector might get helped by this though.
Yes, I think if they stopped buy our bonds, or worse yet dumped them you're screwed pretty bad.

What effect would it have on the U.S. economy and Dollar if China were to unpeg its currency from ours?
It would get harder to buy cheap goods from China and elsewhere. This might help US manufacturing. The Chinese economy's ability to buy oil would increase though, which would screw us.

The question is which country can produced the most exports/barrel of oil.
At least as long as we're all so oil-dependent.

Regarding this ongoing debate between the hyper-inflationists and the deflationists, any guesses on who is right?
If we have problems financing the debt and have to pay high interest rates or print money, that'll lead to inflation. If people don't want to bunker dollars and sit on our bonds, that'll lead to inflation.

Deflation. There's this theory that Fannie Mai and Fredi Mac could bite it and that there would be a mortgage/housing bubble. This seems like it could be deflationary like in the great depression when people found out a lot of things were just paper money.

Is anyone here strategically hedged against the collapse of the dollar, and do you have any strategic advice for others?
I live in Germany and am paid in Euro. I'm looking into buying shares in wind farms.

[ethereal]

17. True

There's this theory that Fannie Mae and Fredi Mac could bite it and that there would be a mortgage/housing bubble.


Been in real estate for the last decade. It's coming.

[Mike03]

10. Thanks for the replies

Thank you all for the input. About a month ago my father received an email from a friend of his saying that he was seriously looking into the logistics of opening a foreign account in another currency. We are not sure how to do this either. But in light of this week’s disastrous events, I’m going to do my best to find out more and I will post what I learn on this site.

Are you all watching gold today? It seems to be breaking out of its $430 resistance level.

I’m still wondering if it’s enough to own these contrarian type funds, that are supposed to rise when the dollar falls. And I have a similar question regarding gold stocks: If they are hedged in the opposite direction, does this defeat the purpose of owning these funds and stocks?

I don’t know about the gold coin vs. gold stocks question. There are also some gold funds, but I don’t know much about them or own any of them. I do know that Goldman Sachs recently upgraded its opinions of Newmont Mining and Placer Dome to “outperform” and increased earnings estimates for both. I’m very interested in Newmont, but the price to earnings ration is very high (59.5), the company has a little bit more debt than other companies, but yet it is highly recommended by some of the pundits I read.

Also, what I don’t understand about the stocks is if they truly rise when gold rises. Some charts I looked at didn’t seem to show that correlation.

The reason I’m a little wary of gold coins is because I hear these infomercials all the time on the local radio—you know, “buy gold coins.” What exactly do we do with the coins? Also, there’s no stock dividend from buying coins. But I’m still in research mode and will share what I find, and am grateful for all opinions from others.

One other thing to keep in mind is that some economists and investors don't necessarily believe that gold HAS TO go up if the dollar falls. I think Bob Brinker may fall into that camp.

[Mike03]

11. Correction

Sorry, the P/E on current estimate for Newmont Mining should be 27. That figure was for the normalized estimate. So it's around the same P/E as Placer Dome, and its profit estimate is about $1.69.

[Strelnikov_]

12. Like Others In This Thread, I Am Interested In Moving My Liquid Assets

to another country, specifically Canada.

If any kind DU'er could provide a brief synopsis on the in's and out's on setting up a savings account with a major Canadian financial institution, I would appreciate it.

Is it as simple as simply contacting a bank, setting up an account, and sending them a cashiers check?

As you can tell, I am as well traveled as our current Emperor.

[bemildred]

13. Nothing to it.

There are reporting requirements.
I had one for a while with Royal Bank of Canada..

[idlisambar]

14. I'm interested in Euro and Yen denominated assets

I am a conservative investor though and prefer fixed-income investments instead of stocks and mutual funds. Any advice on how to go about setting up a money-market account or buy bonds in these markets?

If the dollar collapses there will likely be global repercussions so even though foreign investments will perform relatively better, I would like to know which investments are most insulated from a dollar collapse. Any ideas?

[jsquared]

16. A US broker should be able to get you euro-denominated bonds which

will appreciates against the dollar and provide interest income. I was the first person, however, to request this of my broker so he had to get informed on all this which included finding out about "Blue Sky" registration laws in a given state. Also, for pure currency plays you can set up an account among 15 different currencies with Everbank in the US (www.everbank.com) which is apparently insured by the FDIC. They also put out a very informative daily free email.