The Demise of the Dollar and Why it’s Great for your investments Part 1

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The Demise of the Dollar and Why it’s Great for your investments Part 1

By Addison Wiggin (2005)

The book was published in 2005 but it had already predicted the current mortage and housing bubble in US.

As the dollar continues to weaken against other currencies, it is increasingly clear that this event will have a significant impact on investors and consumers.

This book examines the reasons for the dollar’s current slide-including the nation’s historic trade deficit, the Euro, government spending habits, globalization, and other international factors-and offers an entertaining look at the Federal Reserve’s attempts to “manage” the dollar’s value.

Most importantly it provides practical advice on how investors should stack their portfolios to profit from this situation. From the wide range of possibilities, four investment strategies follow, each design to suit a variety of investing styles. One more thing, if you are the very very risk adverse type, please do not bother to continue reading.

1) Direct short term speculation : Buy put options on Dollar Index futures.
Purchasing put options on the USDX is the most direct way to capitalize on the dollar’s decline.

2) Direct short term speculation : Euro call option
The euro boast a very important virtue that the dollar lacks – a current account surplus. Consider buying Euro FX call options dated at least 4 months into the future. Your max. risk is the price you pay for your options plus transaction cost. Your profit potential is unlimited.

3) Direct long-term speculation : Foreign Currency Certificates of Deposit
By investing directly in a strong currency, you reduce your risks considerably because you are dealing with a single investment that you own outright and can easily monitor.

4) All Season Dollar Hedge : Gold
Gold has always provided a kind of insurance, first and foremost. It is not an investment. But when economic uncertainities mount, buying a bit of gold “insurance” can be a terrific investment. “If gold isn’t a bargain, then what is it? It is a hedge,”says Jim Grant, editor of Grant’s Interest Rate Observer.The price of gold tends to move in a direction opposite to the value of the dollar.

We cannot know, predict or even guess when the demise of the dollar is going to occur, or how quickly it will take place. But we do know that it is going to occur.

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