U.S. Dollar

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The U.S. dollar, since 1913 when the Federal Reserve was created by Congress, has lost 96% of its purchasing power due to inflation. A common misconception today is that the prices for goods and services have been going up. The truth of the matter is that prices have remained nearly the same in precious metals terms; it is the value of the dollar that has declined. It simply takes more and more dollars to buy the same products, since the dollar’s value has become less and less. Gold and silver were scrapped as a “control” mechanism for our economy, and ever since, we have been circulating a “robust paper” in place of real money. This “robust paper” is now the world’s reserve currency in central banks. From 2002 – 2005, the U.S. dollar lost over 40% of its value to the Euro, and had similar losses to other major currencies around the world. Since the dollar is the major reserve currency of the world’s central banks, that means those central banks also lost near 50% of their value. When they wake up and realize that only precious metals hold true value, we’re in for a correction unlike anything ever seen.

The U.S. dollar is declining because of Congress’ relentless borrowing and spending for wars,, and supporting foreign nations, which has ensured continued federal borrowing and continued increases in the money supply. The result has been a downward spiral for the dollar. We have not seen strength in the underlying economic fundamentals in our nation and it tells us that there will be an additional burden on the taxpayers should congress decided to raise taxes to help pay down the nations debts. This will further weaken the consumer.

The U.S. dollars’ failure over the last 25 years has made gold a great bargain considering its true relationship to the dollar. Gold’s peak in 1980 was $850.00/oz but using Inflation adjusted numbers, the same peak would be $2,200.00/oz today. Now that gold has broken $1,000.00/oz, we have begun phase II” of the bull market in precious metals. At this phase we believe tangibles such as investment-grade gold and silver bullion will experience accelerated growth. Strong physical demand from central-bank buying and concerns about inflation are only a few of the major elements now driving this worldwide precious metals rally.

The U.S. dollar, over these past five years, has been interesting to watch. While the mainstream financial community slowly begin to back pedal on their anti-gold positions and cut loose the dollar. A mere five years ago, owning gold was considered stupid by most financial professionals. But who’s laughing now about the wisdom of owning gold? Gold’s 18% gain in 2005 was more than six times that of the S&P 500. In 2008, it was the only commodity to show a profit.

"The U.S. dollar is slowly becoming worthless. Gold will eventually reach $2,000 to $2,500.  Gold at $2,000 will be no big deal…” – says Forbes Magazine.