John Carl,
Editor
Nov. 9, 2022
All hail the almighty dollar!
Over the past few months, it’s crushed the world’s economy and sent foreign currencies plummeting to record lows. The pound, the euro, and the yen have all trembled beneath the weight of the dollar’s buying power. Across the globe, central banks have juggled assets to keep their doors open.
But while it’s been a great time to take a trip to London, or Paris, or Rome, this is no time to get lulled into complacency. A strong dollar isn’t going to protect your wealth long term — tough times are just around the corner. A cash-only portfolio is all but guaranteed to fade as the months grind by.
Why am I so certain? Because the global liabilities held by the dollar are certain to drag it back down. Here are three reasons why the dollar will decline, despite anything else happening in the local US economy:
Reason #1 – The Cost of Dollar-Backed Debt Is Lighting “Little Fires Everywhere”
We’re facing a global debt crisis, as the trillions of dollars in foreign loans become too expensive for small countries to manage. The Fed’s new rates have increased the cost of living everywhere from Pakistan to Argentina.
That’ll also have a huge effect here at home, where we’ve become addicted to the cheap goods that are made in these countries. This is where the Fed’s policies really backfire: the cost of expensive loans in these debt-dependent countries will still inflate the price of goods we see at The Dollar Store.
And if it gets too high, these countries will see their economies collapse completely. As former PIMCO boss Mohammed El-Erian said in a recent interview, “we are living in a world with little fires everywhere… if we don’t pay attention, these little fires could become much bigger.”
The sparks we see flying in Pakistan and Argentina and Ghana and El Salvador, and the dozen other countries the World Bank says are teetering on the brink, will burn away the dollar’s gains.
Reason #2 – Prolonged War in Ukraine Will Wear Out the Dollar’s Stamina
The dollar hit its highest levels with the onset of the war with Ukraine. Each new battle led to higher gains as European countries switched to emergency monetary policies and retreated to the greenback. But we’ve likely already seen the peak of those war gains.
This means there aren’t any good war outcomes for the dollar left…
An increase in war would destabilize and hinder growth, ultimately capping further growth the dollar could see from the region. A decrease in war will put a final end to the fear-buying the dollar has enjoyed so far. Either way, the dollar’s strength is likely to suffer.
Reason #3 – Oil Has Grown Tired of Its Marriage to the Dollar
At the moment the dollar is the required currency of oil, to the tune of trillions of dollars in transactions a year. But that could change much sooner than anyone thinks… Saudi Arabia and OPEC are brazenly making efforts trying to kick the dollar to the curb. As they continue to lose power to oil alternatives like electric vehicles, we’ll see more desperate moves that disrupt the status quo.
Turn Your Dollars Into Gold
All told it’s a reminder to always invest in safe outcomes — and in my view that requires maintaining positive exposure to gold. Here’s why this is important, especially now…
There’s one big, fat reason that gold prices remain down from previous highs… (you can probably guess what it is…)
Ding, ding, ding! The strong dollar. Throughout history gold has a direct inverse correlation to the dollar’s strength. And so as the dollar fades, that’s when we’ll see gold begin to shine.
Gold is also likely to see increases for other reasons as well, including increased industrial uses and rebalance of overseas holdings. And when prices rebound, it’ll send the value of new gold projects soaring.
We’re getting ready for the inevitable — and we have a plan to turn our dollars into gold gains.
Our own publisher and gold guru Nick Hodge has recently returned from a trip to a new gold mine. He visited the drill site and inspected the sample cores himself. (And he recorded a video of his entire trip. It includes all the on-site questions he asked the CEO and management.)
If this sounds like an everyday visit, I assure you it wasn’t…
This gold miner is sitting on a massive discovery that has the power to leverage the price of gold into push up life-changing gains.
Nick is excited, because he’s seen this kind of situation before.
Back in 2012 he covered a company called Reservoir Minerals, when they discovered a mine with similar potential back in the Timok region of Serbia. The moment the true depth of the discovery was announced, the stock surged for unbelievable returns.
In just four years it skyrocketed for 12,000% gains. And as you can see in this chart, that was just for starters...
Even during periods of bear market gold prices its shares continued to soar, until it was finally bought out for a handsome premium. All told, you could have seen 32,000% gains had you seen this coming and bought in early.
In the same way Reservoir Minerals benefitted from its deep reserves, Nick says we could see massive returns from this new gold miner:
“I think history is about to repeat itself. This time with one of America’s biggest gold discoveries. Remember, I’ve been able to figure out this company’s true wealth potential because of my position as an early start-up investor... and because of what I learned on this boots-on-the-ground visit to the mining site in Idaho.
Few outside of a very well-connected group of mining insiders have even heard of this company. Almost nobody knows the secret it holds. But that won’t last much longer. Once details of this mine’s true potential go public... and they will soon... I think this miner will begin a breathtaking ride.”
So it’s a great time to flex those mighty dollars and put them into gold — while the upside remains strong.
John Carl
Editor, Daily Profit Cycle