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The Decline of the U.S. Dollar

And the Perfect Scenario for Rising Gold Prices

By Greg McCoach
Monday, July 26th, 2010

Things are going to start to get real ugly, real fast for the U.S. dollar.

Fortunately, a group of well-informed investors will be able to minimize wealth-damaging effects of the collapsing greenback with a few simple asset reallocations.

Here's what I'm talking about...

The U.S. gov't financial foundation is crumbling

It doesn't seem like a day goes by anymore that I'm not shocked and/or angered by the actions of the United States government. It's as if the powers that be are deliberately ignoring the Constitution and trying to destroy the United States as fast as they possibly can.

This is quickly happening in not just one or two areas, but on many fronts — and all at once.

Let's look at a few of the most recent glaring examples...

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The financial affairs of the U.S. government are in shambles.

The country has a national public debt of over $13 trillion that's growing by tens of billions everyday. And no one has any clue how this massive burden can or will be dealt with.ripped_dollar.jpgThe U.S. currently spends nearly $4 trillion a year, while only taking in just over $2 trillion in tax revenues. As a result, the White House predicts the budget deficit will reach a record US$1.5 trillion this year.

And the U.S. government is currently borrowing 41 cents of every dollar it spends.

You don't need to have a PhD in economics to know that this is a completely unsustainable model for any organization...

Because the government is spending so much more than it's taking in, U.S. officials have been frantically traveling the globe like beggars in order to borrow money to pay the bills.

The problem with this, of course, is that major buyers of American debt have already had their fill of U.S. dollar-backed financial instruments, and are now cutting back on adding U.S. treasuries to their monetary reserves.

Countries like Russia, China, Saudi Arabia, Iran, and Venezuela are cutting down — or completely eliminating — the U.S. dollar from their reserve holdings.

And this spells big trouble for the U.S. dollar in the near term.

This global dollar dump will push the dollar even farther down in the international currency markets, in just a matter of months.

GAME OVER for the U.S. dollar!

The economic recession, which is currently keeping nearing 10% of Americans without jobs, has decimated tax revenues on all levels of government.

The IRS recently reported that personal income tax collections are down 4.4%, yet we keep spending money like a bunch of drunken sailors on leave in a Singapore port city.

To survive, the U.S. government will try to invent new taxes to impose on anything and everything... But American citizens are already taxed to death — and quickly reaching the point where they will be unwilling to pay anymore.

The conflict between U.S. government and its citizens is such that it could rapidly transition from mild tax protests to violent tax revolt scenarios.

The consequences for decades of abuse of public funds at all levels of government and our system of credit in the United States have finally caught up to us.

All of this paints a very robust picture for the gold and silver markets.

In fact I don't think you could dream up a better scenario for creating massive profits from precious metals and their mining shares...

The perfect scenario for rising gold prices

I wish that I could change what's going on in Washington and New York. But I can't do that myself...

So I am left with figuring out a way to minimize the fallout and profit from the fiscal irresponsibility of the once great U.S. government.

As I like to say, the ultimate form of success at such at time is to not only survive; but to survive well. And the best way to survive well in this environment is to own physical gold and silver and quality junior mining stocks.

The portfolios of my Mining Speculator and Insider Alert investment advisories have many of the kinds of companies that I believe will do phenomenally well as the United States goes through the painful progress of financial reckoning.

In the 10 years that I've been an independent investment analyst, I have never felt better about or more confident in the group of companies I am now covering in both of these advisories.

For those who remain committed and patient with the precious metals and mining shares, the rewards in the near future will bring a major smile to your face.

So keep your head high and stay focused on what we are doing.

The biggest gains yet in precious metals will soon be realized.

Good Investing,

Greg McCoach
Investment Director, Mining Speculator and Insider Alert

P.S. Unfortunately, things are going to get much worse from here, folks... Don't believe for one second the crock of lies served up on a daily basis by the government media complex that touts, "All is well!" or "The recession is over!" It simply ain't so.

To survive well, you'll need to be in gold and silver. And one of the easiest ways to leverage precious metals prices is through the Mining Speculator and Insider Alert portfolios. We're currently closing double- and triple-digit gains left and right. You can learn about one of my most recent scores, right here.

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Comments:

Comment by Malcolm on 2010-07-26
Well I hope Greg has his hat tied tight because looking at the two year chart for the dollar there is a massive cup and handle formation which is very bullish and gold is struggling to stay above it`s lower uptrend line. Even though it has kept pace with the dollar this year we could see a real breakdown in gold if there is a dollar surge
Comment by R. mondoux on 2010-07-26
To get good protection against a fall in the US dollar, american citizens should invest in good canadian cdompanies and REITS such as: Canada's 6 big banks which are very well capitalized:Royal, Montreal,Scotia, TD, Commerce and National. (National and TD should be increasing dividends this year)

Fortis (FTS), Artis, Boardwalk, Calloway, Riocan, Rogers communication, Westshbore terminals.

In addition to getting good dividends in canadian dollars, US citizens will get an extra bang for their buck as the Canadian dollars keeps rising.



Comment by Paul on 2010-07-26
What about the fact that the USA has been so successful in creating true globalization?
"The reality is, in the spreading of free markets and the triumph of the American values, as fondly imagined by the US commercial, industrial, financial, and military prophets, the USA has created worldwide industrialization, which is spelling the end of American primacy as it becomes one among several powers struggling for a place in the sun."
So, if the US dollar crashes, so do all other currencies in the world; with the possible exception of Canada!
The world is in a financial and social paradigm shift and, while I don't know exactly what the answers will be, I do know youe continued reliance of 20th century principles and process is outdated and irrelevant.
A PROUD CANADIAN