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Global Financial Changes Coming

A movement has begun to shift away from the dollar. This movement is only in its formative stages. Countries in the Middle East are talking about changing payment for oil from dollars to the Euro. It began with Iraq . Saudi Arabia is considering it, along with Venezuela as well as Indonesia . Other nations in the Middle East and in Asia are considering going to a gold backed currency. Then there is the introduction of the Euro which now competes with the dollar. One of the reasons the dollar has fallen over the last 18 months is that institutional money is shifting into the Euro. Central banks have also begun a program of diversifying their reserves from dollars to the Euro and even gold and Silver. China ’s central bank last year bought 200 tones of gold.

This shift out of the dollar will accelerate as a flood of dollars hits the financial system. These dollars entering the world's financial system is the result of our burgeoning trade and current account deficit. At the moment, the dollar's fall has been temporarily arrested through the process of intervention. However, as the amount of debt increases in our economy, as the trade deficit gets bigger setting new records, as the government's own budget deficit expands beyond 7 trillion dollars and grows even larger.

Confidence in the dollar will evaporate and there will be a rush for the exit gates. When this happens, the U.S. will impose capital controls in an effort to contain the crisis and keep it from spreading. The capital controls could come in the form of different color money—one inside the country and one for outside the U.S. There will be an effort by the Fed to restrict the free flow of dollars out of this country as there will be an effort to keep dollars from returning.

Accumulate Precious Metals

We recommend owning both silver and gold bullion with a greater weight given to silver. Silver has more upside potential given its scarcity and price decline. It has already lost 90% of its value since reaching its peak back in 1980.

Own Gold & Silver Equities

In addition to owning Silver and Gold bullion, you should also consider gold and silver equities. Pure silver equities are in fact rare. I can count them on my two hands. In the financial storm that is coming, there is going to be a mass exodus out of paper with people looking for a safe haven that isn’t someone else’s liability. This will create an enormous demand for precious metals. There simply isn’t enough available silver and gold bullion to handle this demand. There are tens and tens of trillions of dollars invested in paper assets. Just imagine what will happen when some of this money moves into precious metals. The money will be moving into Silver and Gold bullion first.

When the price of bullion skyrockets and becomes unavailable, there will also be a mad rush for anything associated with gold and silver. At some point during the crisis, all of that money is going to be looking for safety and there are very few safe choices. Most money will move into foreign currencies because it is the only market large enough to accommodate it. However, the big move will be in the metals market both in bullion and in the precious metal equities. If you are buying precious metal equities, you want to own unhedged companies with good properties, mines in safe jurisdictions and companies with good cash flow and a strong balance sheet.

You must understand that the time for becoming prepared is running short. You must begin now without hesitation. Some people are perpetual procrastinators; while others are doubting Thomases. Not unless they can see the storm clouds directly overhead are they ever prepared to act. If you are one of these types, I don’t know what else to tell you other than to challenge you to think for yourself.

Do you believe that asset bubbles can continue forever or debt can bring prosperity?
If you have a lot of debt, do you really feel secure or wealthy because of it?
If you are banking on the government or the Fed to bail you out of your problem, is bankruptcy and welfare a desirable option?
Look around you. Open your eyes. Read the headlines.
Ask yourself what is it that you see?
Become informed. Get educated.
In the final analysis, the only person responsible for your outcome is yourself.

Is Forex Currency & Metals A Part of Your Investment Portfolio?

Forex International Trading Group, Inc.


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