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overtheedge
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Why I Sell the Dollar: From Dollar Strength to Dollar Weakness - Axel Merk - Merk Fund

"To those that say the U.S. has the cleanest of the dirty shirts, we would like to point out that it hasnt helped the greenback, as evidenced by the euro outperforming the dollar both so far this year, as well as last year. Yes, we have a mess in the Eurozone that wont be resolved anytime soon. But we also have a mess in the U.S., Japan, and many other places around the globe. Most of these problems are neither new, nor are they going to go away. We may not be able to convince policy makers to pursue sound policies, but we can allocate our money in a way that potentially mitigates some of the risk and provides profit opportunity from what may lie ahead."

Any analysis that centers on the government revenue stream as the determinant of that nation's economic wherewithal and currency strength is doomed to failure.
Industry has proven that they can manage money. Growth and contraction is managed fairly effectively.
The key is personal debt management.
Economy goes up, personal debt increases. Economy goes down, personal debt is rarely reduced.

Now consider that personal debt is rarely for profitable enterprises.
The developed world seems addicted to buying entertainment on credit as a form of emotional masturbation.
Feels so good at the time.
But tomorrow they need another fix.

Any economic recovery depends on the consumer maintaining a small and manageable debt load.
This demands that the people must have a dependable source of revenue available to get them through the bad times and still leave monies for investing once the economy stabilizes.
The most dependable is that which you already hold and manage.
Economic stability is the key to enter a period of economic growth.

Without the citizens having low debt load and sufficient savings to carry them through the initial economic mess, an economic turn-around won't be forthcoming for many years to decades.

Debt must be purged and assets accumulated before confidence can once again grow.

The concept that the US has the cleanest dirty shirt is nonsense.
A dirty shirt is still a dirty shirt. Cleanest is just a matter of opinion.
The shirts to look to are those where the people have gold and silver in their pockets.
That dirty shirt is then evidence of the industrious effort of the one who wears it.

Regimes come, regimes go.
Usually this is predicated on regimes fostering or abusing the economic capacity of the nation.
But if you can convince the people to join the debt orgy, they will stand with the regime until their own dirty shirt rots off.
Then God help us. Head for the high country because the animals will stampede and destroy everything in their path.

Assets can't be accumulated without a stable economy.
And asset accumulation will be hampered by the need to replace damaged critical infrastructure.

No sir. The US has one of the dirtiest shirts.
Look to those countries where the citizenry accumulates assets faster than debts.
They are NOT the enemy.
The comic strip "Pogo" said it all with something along the lines of, "I have met the enemy and it is us."
Cleanest dirty shirt? Those who would claim such nonsense need to put your nose in the corner.

Money comes, money goes and debt, well unless managed most carefully, debt grows.
Asset valuation is a matter of opinion until the money changes hands.
Taking on non-productive debt is accepting the fate of Sisyphus.
Don't be surprised to get crushed in your cleanest dirty shirt.

Sell the dollar? You bet'cha. Any time and every time someone else sees PMs as a non-performing asset.
Even the "Lone Ranger" preferred silver over base for his bullets.
It appears the US citizenry prefers feeding their baser instincts rather than reduce debt.
Don't brag about your cleanest dirty shirt after sleeping in the economic gutter.

And if you are gonna down-arrow me, have the common courtesy to explain why I am wrong.
My opinions are subject to change as new data is accumulated, analyzed for veracity and assimilated.
Admittedly, I expect too much. Every belief system demands fierce denial of any conflicting data, information and opinion.

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Beginning of the headline :Q3 of 2013 marked a peak and reversal of direction for the dollar. The notable strength in the dollar during Q2 turned into an equally prominent weakness in Q3 compared to a basket of foreign currencies. All of the G10 currencies strengthened against the dollar during Q3, while the price of gold rose more than 7%. See attached chart for the performance of the U.S. Dollar Index for the year through 10/31/2013. Euro, the Undiscovered Rock StarIn our outlook at the beginning of this year we predict... Read More

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