Inflation Hedge Strategies and Thoughts for 2010 and Beyond
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It is widely known that government authorities across the globe are attempting to pump prime their nations' depression-racked economies by printing vast sums of paper money. Some nations, including the United States, are running trillion dollar deficits and will go deeper into debt in future years in order to finance an expansion that may not materialize as planned.
If we reach that point where the pump priming from the Fed and the fiscal excess of the government fail to keep the economic shell game going, the financial markets may lose greater confidence in our dollar (the dollar index is currently at 79.19 on June 1, 2009), Treasury bonds and stock market {Dow Futures at 8688 {(though the stock market may move higher as it has exceeded its 200 day moving average: a widely watched indicator)}.
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The End of the Dollar as We Know It?
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The currency markets, like most other financial markets, rise and fall partly based on international confidence in the economies, politics and monetary and taxation policies of the various nations whose paper money is traded through international exchanges.
The U.S. dollar enjoys a current status as a reserve currency.
The Wikipedia Free Encyclopedia defines a reserve currency as "a currency which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, such as oil, gold, etc."
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How to Invest in Barack Obama's "Workers Paradise"
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The Obama administration may be doing everything in its power to destroy private industry jobs faster than the government can "create" them. The U.S. government itself may be the best growth industry in the U.S. as the government directs taxpayer money into the industries and pet projects of its choice.
Normally in capitalist economies, recessions clean out businesses and consumers whose risk-taking did not succeed or who accumulated excessive debt and cannot pay it back. A downturn will then lay down the foundation for healthy growth in the future by rewarding both older and new business success stories and punishing businesses that did not adjust to a dynamically changing economy and therefore failed. This is sometimes a painful process.
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Why Gold May Begin the Last Leg of its Bull Market Sooner Than You Think
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Gold in February 2009 is trending up towards its all time high of $1,023 per ounce made on March 18, 2008, after a correction that lasted for seven months. The price of gold in this upward trend may reach as high as $3,700. I conceive that this price move may transpire within the next two years.
As bubbles tend to repeat over history, there are a number of markets that can be instructive in determining the dollar amount and duration of a long cycle.
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Will the U.S. Suffer an Inflation or Deflation in 2009-2010, (or Both)?
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In my article, The Credit/Debt Crisis: A Depression Era Stock Market and America's Financial Failure?, published on my website on October 10, 2008, I posited four possible scenarios regarding the outlook for our general economic future. Of those four scenarios, it may be that we are experiencing the most chaotic and potentially destructive scenario, one that may be difficult for many to envisage:
That is the third outcome posited in the article: "In this case, the deflationary forces would win the battle against Federal Reserve easing and government action, at least temporarily. In response to a deflationary calamity, the Federal Reserve may run the printing presses until an inflationary recovery could take place. Gold may do well under this chaotic scenario."
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