If the dollar is collapsing should we convert them now?

[Winston]

If the dollar is collapsing like some are saying, should we convert all our money to Euros now?

If so, how do you do that? Just go to the bank and ask them to do it? What are the steps required for converting to foreign currencies?

Or how about buying gold bars? I think each gold bar is like $500 though right?

[Mr S]

The dollar is actually strengthening now against the Euro and Pound, and if they pass this proposed bailout I think it will continue to strengthen as the financial problems are just starting to hit Europe now and people will start moving their money back into America to protect their finances and also prop up the American financial system as there are not many alternatives to diversify their finances. Even though the American system is having problems investors know over the long haul America is still one of the best places to invest their money for the long term. I wouldn't worry about it, the Philippine peso will keep getting weaker against the dollar over the next year. There is always a slight bump during Christmas season because people send money back but it will begin declining again after January 09.

Here is a good article to read for more info as this author is quite intelligent. If you have time read his other editorials from past weeks:

http://www.atimes.com/atimes/Global_Eco ... 0Dj08.html

[momopi]

Don't chase tail ends. Buy low sell high.

Gold and silver are over-priced and you should wait until they drop before buying. Keep a small % of your assets in precious metals (1-2%?) but not everything.

Gold and silver is only worth something if civilization exists and there's a demand for it. If the dollar fell and US government went under, precious metals might not be worth much under a state of anarchy. Simple hand tools, box of nails, water purifiers, medicine, firearms, and ammunition might be worth more under such circumstances.

During the great depression, cash was king and gold was outlawed (until 1970s). There was a major deflation problem and you could buy stuff pennies on the dollar. Since then the US government has taken steps to protect people's cash deposits through FDIC.

It's also a good idea to keep part of your assets in foreign currency, mutual funds, etc.

During 19th century, Mexican peso (based on Spanish silver dollar) was the preferred world trade currency, and legal tender in US and Canada until 1850's. The early currencies of US dollar, Chinese Republic yuan, Japanese yen, HK dollar, and Malaysian (Straits) dollar were all based on the Mexican peso. Many early US mints actually imported the dies from Mexican City Mint, because the Mexicans were considered the experts. Peso actually means "weight" and Mexican peso had a reputation in purity (.903) of silver and exact weight.

How many people would consider the Mexican peso to be a major currency in the world today?

There will be a time when the dollar will lose its position. That day is not today, and may not even occur in our life time. But a smart rabbit keeps multiple exit holes.

From personal experience, it's much easier to purchase foreign currency deposits overseas than in the US. If you're in the US you have to use services like everbank.com for foreign currency deposits. In Asia, playing with foreign currency is much more popular and easy to do. Many local banks offer foreign currency deposits too.


A good retirement investment portfolio is a well diversified one.

[Grunt]

Gold, silver, and lead.

Then maybe some storable food.

[DiscoPro_Joe]

The dollar is actually strengthening now against the Euro and Pound, and if they pass this proposed bailout I think it will continue to strengthen as the financial problems are just starting to hit Europe now and people will start moving their money back into America to protect their finances and also prop up the American financial system as there are not many alternatives to diversify their finances.

The dollar is only temporarily strengthening due to the short-lived liquidation panic, and due the people's blind faith in government intervention. In the coming few years as people continue witnessing the interventions' failures to fix the economy (and actually prolong the recession, drag it out into a depression, and make it worse in the process, just as happened in the 1930s and '40s), the U.S. dollar will dramatically weaken and possibly collapse. Why? First, view this chart. Unlike the "last time" in the 1930s, today the U.S. has no trade surplus, and no international dollar-gold-standard pegging. (The trade surpluses vanished by 1985, and the international U.S. "gold window" was abolished in 1971.) The U.S. dollar just won't offer foreigners something of value anymore as it did in the past, so they'll dump it. And as the dollar loses more and more value, foreign governments will eventually choose to protect the value of their own assets instead of propping up America by further debasing their own money.

When that happens, there will be a very deep recession thoughout the world, but only for a short time. Why? Because the U.S. has actually been a drag on the world economy since the mid 1980s when the U.S. became the world's largest debtor nation. Foreigners have been allowing the fruits of their labor to be siphoned off to fulfill the debtor gluttons of the U.S. Once the dollar collapses, many foreign currencies (especially East Asian ones) should rise. The goods and services that foreigners produce will stay in their own countries, to be domestically consumed with their suddenly-stronger domestic currencies (and greater purchasing power). Their living standards will rise much faster, and much of the world will emerge from its big recession magnificently while the U.S. remains marred in a depression for another 10 years or so.

Even though the American system is having problems investors know over the long haul America is still one of the best places to invest their money for the long term.

Not until the year 2020 or so, at least.

[Winston]

Boy some of you have very pessimistic predictions about the dollar and the US economy. Fortunately though, pessimists usually turn out to be right less than ten percent of the time, in most cases at least.

But since there are so many factors involved here, how can anyone make such a sure prediction either way?

It is strange though, that the dollar is getting stronger now, while the economy is in bad condition.

[DiscoPro_Joe]

Gold and silver are over-priced

DEAD WRONG!!! In inflation-adjusted terms (using the U.S. government's lowballed CPI numbers), gold topped out in 1980 around $2,500 per ounce. In inflation-adjusted reality, gold's 1980 top was probably above $4,000 in today's dollars. Right now (as of 10/11/2008), gold stands at a quite-cheap $850.

and you should wait until they drop before buying.

Agreed. However, it's also important to note that gold is in the midst of a secular bull market. It began in 2001, and will probably last until the late 2010s decade or so. It's best to buy on the dips, while "going neutral" on the crests within this bull market.

Keep a small % of your assets in precious metals (1-2%?) but not everything.

Hahahahahahaha!!! I've been keeping 100% of my investment position in physical gold bullion since 2003 when I began studying the last 100 years of the markets and became interested in investing. Gotta prob'em widdat?

Gold and silver is only worth something if civilization exists and there's a demand for it.

Correct.

If the dollar fell and US government went under, precious metals might not be worth much under a state of anarchy. Simple hand tools, box of nails, water purifiers, medicine, firearms, and ammunition might be worth more under such circumstances.

A state of anarchy doesn't necessarily entail chaos as the French Revolution did. Organizations and private institutions might simply offer their "property-protection services" to any neighborhoods and property owners who are interested. People would simply use other currencies as their medium of exchange, that's all. And stable companies (and wealthy individuals) could buy up the government's property and assets, and put them to uses that are valued in the marketplace (or go bankrupt if they don't).

Society is perfectly capable of spontaneously organizing itself from the bottom-up, without a centralized government.

During the great depression, cash was king and gold was outlawed (until 1970s).

But plently of Americans still bought and sold their gold, albeit illegally. Eventually, the government only pursued isolated incidents (and companies) where millions of dollars' worth of gold was involved. And even if you were wealthy, you could still buy, sell, and hoard your gold overseas where it was still legal.

There was a major deflation problem and you could buy stuff pennies on the dollar.

Why is deflation a bad thing??? Deflation was not a cause of the depression, but instead, was a beneficial result of it. The much-cheaper prices helped bring the economy back into equilibrium. People who still had jobs (and weren't invested in stocks) could afford more things. This created a phenomenon called "pent-up demand." The government was trying to fight this trend tooth-and-nail by attempting to artificially prop up asset prices, which only prolonged the misery of the depression.

Mexican peso had a reputation in purity (.903) of silver and exact weight.

How many people would consider the Mexican peso to be a major currency in the world today?

The Mexican peso was obviously debased a long time ago (which, in physical-coin-content terminology, means that all newly-minted coins eventually contained less silver, or none at all. They were made of base metals instead.) Guess what happened to the existing Mexican .9 silver coins? They instantaneously became hoarded, with only the base-metal ones being circulated. Do a Google search on a concept called "Gresham's Law" and you'll understand this. The exact same thing happened in the U.S. in 1965 when dimes, quarters, and half-dollars stopped being minted with .9 silver, and instead were made of base metals. The pre-1965 ones disappeared from circulation virtually overnight as people hoarded them.

There will be a time when the dollar will lose its position. That day is not today, and may not even occur in our life time.

I think that day will come within the next few years. See my reply to Mr. S above.

[Grunt]

What are you going to do with Euro's when your town falls into Hurricane Katrina type anarchy? Go watch the movie Mad Max 2: The Road Warrior to refresh your memory.

New Orleans should be used as a benchmark, as it gave us a glimpse into what we can all expect. I just ordered 300 pounds of storable food, and that's on top of the stuff I already have.

Buy as much gold and silver as you can get your hands on. There may come a day when 5 ounces of gold will buy you a complete home. Or an ounce of silver will buy a weeks worth of bread.

Euro's will help kindle a fire, nothing more.

[DiscoPro_Joe]

I just ordered 300 pounds of storable food, and that's on top of the stuff I already have.

Not a bad idea if you plan to stay in the U.S.! When the gov't starts putting price controls on food as a stupid way of "fighting" inflation (which it created, of course), that will certainly cause major shortages of food products.

But here's a better idea: why don't you instead get your ass to another part of the planet -- such as East Asia -- where these mishaps are far less likely to happen in the next 10 years? Then you wouldn't have to live in fear, isolation, and loneliness. Whaddaya think about that? And how 'bout you, Wu?

Buy as much gold and silver as you can get your hands on.

Amen, bro!

Euro's will help kindle a fire, nothing more.

I'm not much of a fan of the euro, either. The European gov'ts and central banks seem hell-bent on bailing everyone out there, too. But Europe doesn't have as much debt (relative to GDP) as the U.S. does, so the euro seems to be the lesser of the two evils (compared to the U.S. dollar).

Anyway, I'm waiting for Winston to respond to the "whaddaya think" jab. hehe

[Winston]

Anyway, I'm waiting for Winston to respond to the "whaddaya think" jab. hehe

W: What do I think about what? Going to live in Asia? Sure if it makes you happy. But if you're doing it to escape the US's economic collapse, then don't ask me about it. I don't know enough about this topic to comment on it. Only time will tell whose prediction is right.

I hear that the Swiss Franc is the most stable currency. If you live in Asia, shouldn't you convert your cash to something else? If so, what?

The dollar has picked up here again though. But some say it's just temporary.

[polya]

I've been studying this for a long time & I have sorted through the crap and found this:
1. Don't listen to people who are not experts (including ME) - only listen to respected people like Peter Schiff (google him).
2. Other currebcies will face the same problem as the US dollar in the future so you cannot keep your money in the Euro forever. But countries like CHINA will be safe for a long time.
3. GET OUT OF AMERICA NOW TO AVOID MASSIVE PROBLEMS AHEAD - ITS A WASTE OF TIME ME TELLING YOU WHATS COMING BECAUSE I DON'T KNOW THE SEQUENCE.
4. If you are poor and have no money, then don't bother doing anything except leaving America asap.

[Grunt]

Dont cut yourself short, polya.

Hurricane Katrina showed us all we need to see. Thats what coming to every town in every state in America...sooner or later.

[polya]

I am very freightened because the War on Terror is never going to end. Now its too late to sell your shares & real estate (unless you've owned them for decades). With national id cards coming (internal passports - your papers please!!!) you must be asleep not to understand where we are heading.
Grunt is right, so don't wait until its too late. First step: SELL ALL $US BEFORE THEY HYPER-INFLATE AFTER THE ELECTION. Second step: tell all your friends and family to do the same.

[adam917]

I am very freightened because the War on Terror is never going to end. Now its too late to sell your shares & real estate (unless you've owned them for decades). With national id cards coming (internal passports - your papers please!!!) you must be asleep not to understand where we are heading.
Grunt is right, so don't wait until its too late. First step: SELL ALL $US BEFORE THEY HYPER-INFLATE AFTER THE ELECTION. Second step: tell all your friends and family to do the same.

Can't say I didn't know this was going to happen but thanks to a number of stupid buying decisions (not stocks or anything investment-wise but basically not saving my $$$$) I have made all year, it looks like I will not have enough to get out in time if anything more serious happens before about next spring at the earliest. Though what can be said is that even if I did save everything I got since 2007, it still wouldn't have been enough to actually move abroad.

What advice do you give to (current - as in 2008/2009 & beyond) high school/college students who haven't actually had their first true professional job yet?

Is it truly smart to use all of one's life savings to suddenly go elsewhere & then a few months goes by & you run out, not having a way back or a way to survive there?

Doesn't it take at least a couple years to plan & prepare to move to another country?

[Winston]

So what do you all think now as of today? Will the dollar collapse? If so, what should we do? Wait like a sitting duck?

Or buy gold? Or convert to other currencies? If so, which ones?

Check out this disturbing film.