With the U.S. Government bailing out Freddie Mac & Fannie Mae, the dollar will remain weak. First it was lowering rates much lower than most thought they would. Then, it was sending out stimulus checks to basically anyone. Of course, I didn’t get one. All of this is adding fuel to the fire of a weak dollar. Where is all this money coming from for bailouts and millions of checks? They are just firing up the printing presses again. Wait. They never turned them off.
But, instead of focusing on the negatives, let’s focus on how we can make some money. There’s lots of ways to benefit from a falling dollar. You could invest in foreign companies or American companies that have most of their sale outside the U.S. You could also invest in various structured notes that are based on foreign currencies. There’s also various non-dollar currency ETFs. Or, just simply buy gold. I’ve held gold since early June. It’s now destined to test the old highs. That means if you’re not in gold, you still have time. GLD can go to at least $100 from its current $96.
But, can it go even higher than the old high? I think gold now has a reason to go to new highs and keep going. The only way gold can go down right now is if Treasury Secretary Paulson comes out and says the Treasury is selling gold to buy dollars (which they should do). But, this Treasury isn’t that sophisticated. So, the dollar will keep going down and gold will keep going up. More and more people are getting scared and they tend to run to gold as a safe haven. It’s happening again.
