Ready for Your Dollars to Be Canceled?
The comments below are an edited and abridged synopsis of an article by Rick Ackerman
With ongoing financial turmoil and the prospect of a world war, gold is behaving as expected. Although we are nowhere near the top (open interest is still low), we can expect a short-term top. The gold bull has traditionally carried as few riders higher as possible, and this time will be no different. There are two targets above $2,000 where there will be buy stops for the algos to run and establish short positions.
If they do run the buy-stops, they will attack sell-stops under $1,600 so they cover profitably and get long again. A long-term Fibonacci fan with a red 2/3 line has acted as both resistance and support since this bull market started in 2001, and would be a likely target on the downside. Such a dramatic move would set up a slingshot move to the upside.
If there is one more dramatic move down, expect gold stocks to hold up well relative to physical. Accumulate gold and silver mining stocks and do not time buying and selling core positions, since you could be left behind. However, any large move down would be an opportunity to add to positions.
As for the US dollar, it may be taking its last breath. It has the distinction of being the only currency that has never been canceled, meaning if you have a greenback from 1861 it is still legal tender. In a currency reset, all liabilities will be left in the old currency so that the government can print away this debt without affecting the economy. Its liabilities in the new currency would then be wiped out, allowing a ‘fresh’ start.
It is hard to say who the winners and losers will be when the dollar is finally canceled, so the best approach is to minimize exposure to bonds and diversify into hard assets: Precious metals, real estate and anything else that will have tangible value. In a monetary crisis, everyone loses, but how badly depends on how you prepare for the crisis.
