How far can the dollar go down?

How far can the dollar go down? Theoretically, the U.S. dollar can go to zero. Although unlikely, it should be remembered that nearly every currency that has ever existed throughout history, eventually have a crash that destroys 90% of absolute value, or more.

Will foreign central banks support the dollar?

Why should they? If you are hungry and your 600 lb neighbor (who is now so fat that he can not even go further, he must use one of these small carts) missed a few meals, which happen to be 5x expensive as yours, would you fund his dessert? Of course not. You think many things, but to his habit of overeating is not one of them. United States consumes over 25% of the world's resources, but produces less than 10%. Economists may not care for such a crude analogy, but the situation with the U.S. dollar is very, very simple, and should not be too complicated. U.S. dollar has a reserve currency for the post WW2 world, but then Nixon abandoned gold standard, USD is supported only by faith and faith in the U.S. government. We see a commodity boom, not because of a bubble in commodity contract asset prices, but due to a decline in U.S. dollar, the world's reserve currency in which many commodities (especially oil and gold) are priced. In any case, it is unlikely that foreign central banks will save the dollar, because it would in fact make them eat a realized loss in its current account. Moderately rich countries can not afford to take the loss of the USA, the largest and richest economy in the world. The U.S. has an economic big brother who betrayed in other economies fail?? but the U.S. has no big brother to lean on, except perhaps Russia, though it would not go over too well in Washington. So if the U.S. defaults, which may come to the rescue?

Gold is cheap

Adjusted for inflation, gold should be in 1500??? without regard to any boom. Many wonder if the raw materials may continue to increase, but given the low commodity prices were in the late 90s. An economy can live without services or money, but you can not decide not to eat or use the oil. Gold is money, the high price of gold is reflecting investors' concern about the value of money?? no money. The U.S. Dollar is a reserve currency when the USD goes down, so do many other currencies. The majority of USD holders are foreigners, but the change (previously 10 years of foreign holders of USD has fallen from 77% to 62%).

What to do?

One argument of this kind must have one that is next or that you should do. Unfortunately, this is a complex situation with no magic bullet solution. On a basic level of personal finances should sell your mortgage at any price and become debt free with low cost of living. Do not bet on an economic recovery that will save your finances, it will only get worse. Second, do what you do also? regardless of the value of the dollar or the state of the economy, there will always be demand for goods and services (unless you happen to be in the land reserve company, then you can start searching for farms.) The good news is that in each period of chaos, uncertainty and reorganization are always great opportunities. To take advantage of them may not require huge amounts of capital. Knowledge of the situation can lead to being in the right place at the right time or at least not in the wrong place at the wrong time, for example, would not be smart to be in South Florida my financial suffering that can lead to crime, riots, total fraud, and a depressing local economy.

Property surrounding the small country towns has doubled in 1 years! Agricultural land has increased by as much as 500% in some areas in recent years. There are plenty of opportunities in this market, but they may not be the traditional opportunities that investors are accustomed to.

It is 2008

There is a new market will accept it or not. We do not live in the 1970s, it's not 1970 it is 2008. In 1970 Russia was communist, now there are more billionaires in Moscow than in New York. During 1970 Oil had not yet reached its peak, there was no internet, the financial markets are not liberalized to the extent that they are now, there were no derivatives, no climate change, and no oil-hungry China. In 1970 Europe hardly organized, just 25 years of reconstruction after ww2, and there was no Euro.

Thinking Different

It is the only way to survive in the new investment paradigm is to be nimble and to anticipate the information curve. In each area applied intelligence can earn a solid position and with great profit. Safe havens are no longer safe as they were, the bond will be destroyed by inflation, tips (inflation protected bonds) are trading negative for the first time ever, which means that you bet inflation will be lower than the less loss you will take on the bonds.

A trader named Paulson made a record Wall Street profits only trading, short-circuit SubPrime loans. Gold investors like to sit at 300% + returns since 2002. Those holding U.S. dollar short positions have doubled their money in several years. CTA program has reached 70% - 150% in 2007, trading currencies, commodities and future. The long oil or gasoline futures over the past few months have been very profitable.

Obviously there are hundreds of possibilities but no clear magic bullet solution that can be recommended, compared with 5 years ago when a dollar short or long Gold portfolio had been safely recommended. This is why Elite E Services is launching a Global Opportunities Hedge Fund, which should be ready in late spring. If you buy for yourself, take quick profits and do not have any position in the long term, and seek new opportunities. Think of the possibilities that may be biased towards the short side than the long side, as the Dow and Nasdaq shares will be affected by a declining dollar, declining U.S. economy, and credit problems.