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What’s Killing The US Dollar?


The Dynamic Wealth Report
September 24, 2009

What's Killing The US Dollar?


The question of the day is simply, “What’s killing the US Dollar?”  I wish the answer was easy, but like most things in life, it’s a bit complicated.  The problem is… there are too many correct answers.

It’s like all the Roman Senators stabbing Julius Caesar – “Et tu Brute?”

Individually they all caused damage.  But which one caused the death blow?

Ben Bernanke is of course caught holding the first proverbial knife.  He’s flooding the market with more and more US Dollars. More money chasing fewer goods is causing the value of the currency to fall.  Congress is another conspirator.

Instead of calling for fiscal responsibility, they’re pumping the economy full of stimulants… I mean stimulus.  Our mounting debt is causing government bondholders to question our ability to repay.

Toss in President Obama and his plans to spend trillions on healthcare reform that no one understands.  More spending, more debt, and more damage to the US Dollar.

The third and biggest conspirator is the US media.

I’m convinced they are the one delivering a death blow to the US Dollar.  I can just see them standing over our currency with a knife in their hand.

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Their refusal to highlight the destruction coming from welfare state policies, uncontrolled government spending, and inflationary pressures will lead us to ruin.  The media is conspiring to hide these problems.  For the life of me, I can’t figure out why?

Just look around and you’ll see evidence of the destruction yourself.

Those of you who read my articles regularly know I’ve been calling for the fall of the US Dollar for some time.  As a matter of fact, subscribers to my Currency Options Insider service have been making money on this long term trend for some time now.

Why the US Dollar is falling is obvious… and I’ve got a few ways you can profit.  Just give me a moment to explain.

First off, commodity prices are going to jump as the US Dollar falls.

Just look at Oil.  It’s up almost 100% from the lows just a few months ago.  Silver is up big, so is Copper, Tin, Lead, and even Nickel.  I’m not going to bore you with facts and figures about commodity prices.  Just look at any of the charts.

Here’s the risk.  With commodity prices leaping, how can we expect to buy anything at a discount?

Just think of delivery costs.  How can you expect to pay less for something when the cost of getting it to the store keeps increasing?  You and I are going to get stuck with this ever increasing bill for goods.
Prices are going up and that’s inflation.
 
And that doesn’t include all the extra taxes we’re going to have to pay.  How else are we going to pay off our debt?

The net result is a falling US Dollar.

Look at this chart.  I feel like yelling at the pilot – “Pull-up! Pull-up!”

US Dollar Chart

Can we go lower?  That’s not the right question.  What you should be asking is how much lower can we go?  The answer to that is scary.

When the US Dollar becomes trashed, no one will want it.  Your purchasing power will be destroyed.  There is a way to profit…

The first way to profit from a falling US Dollar is by buying hard assets.  It’s a great protection from inflation.  Why do you think Gold is over $1,000 an oz. right now?

Hard assets like precious metals, commodities, real estate, and even timber will climb in value as inflation hits the US Dollar.  Commodity junkies should be rejoicing for the next few years.

Another beneficiary of the falling US Dollar is overseas investments.

Just look at the overseas markets.  International markets are on a tear.  Russia is up 97%, Sri Lanka 95%, Argentina 85%, and Indonesia 81%.  US Dollars are flowing out of the US and into emerging markets.  And that’s driving these markets higher.

It makes sense.

Investing in emerging markets gives protection from the US Dollar – after all, you converted into another currency to make the investment.  And you get exposure to areas where growth rates are more robust.

What’s the easy way to invest in emerging markets?  ETFs of course.  There are a number of good ones out there so take a look.

The third and final way to profit from the collapsing dollar is simple. Buy the PowerShares DB US Dollar Index Bearish ETF (UDN).  As the value of the US Dollar falls, this ETF is designed to increase in value.

Remember, we’re in the midst of a collapse of the US Dollar.  It won’t happen overnight, but the process will be very painful for those who are not prepared.


ETF Action 

The Proshares Ultra Short Real Estate ETF (SRS) is one of the most active ETFs this week.  Investor fears about the real estate market are continuing to color investment decisions.  Clearly, many are positioning for a big fall in the commercial real estate industry.


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Issue Date:
 Thursday, September 24, 2009


Notable Highs and Lows

•  Emdeon (EM) hit a new low of over $15. The medical records software company recently went public.  Not a good sign in this market.  Their market cap is now over $1.1 billion.

•  Red Hat (RHT) hit a new 52-week high of just over $28.  The software company announced results yesterday and beat sales and earnings estimates.  They have a market cap of just over $5 billion.

•  Royal Caribbean (RCL) hit a 52-week high of just over $24.  The cruise line is seeing their stock jump after a rival company announced an increase in outlook for 2009.  Their market cap is now over $5.2 billion.


Quote of the Day

"A cynic is a man who knows the price of everything and the value of nothing."

                                  -
Oscar Wilde

 
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