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RE: The US Dollar Is Screwed Part 2 - How I'm Protecting Myself

in #economics8 years ago (edited)

Why do you believe gold/silver to be undervalued?

I appreciate your comment. To name a few of the reasons:

  • I think the dollar is significantly overvalued (reasons outlined in part 1 on my blog, which involves trade deficits and debt). The value of the dollar and the metals are inversely correlated.
  • The market and governments believe in Keynesianism, which I'm confident is a broken economic theory.
    Their way to "fix" the economy is to force interest rates down and create obscene amounts of currency units.
  • Manipulation of interest rates creates massive distortions in the economy. When those distortions eventually correct themselves, massive disruptions happen. These disturbances create economic chaos, making people run to the metals.
  • Creating significant amounts of dollars devalues the dollar. A devalued dollar means a higher price for the metals.
  • The market is pricing in too many interest rate hikes. They think the economy is strengthening and interest rates are going to normalize. They're wrong.
  • I believe the Fed is going to force interest rates back down, probably negative, and launch another round of monetary stimulus. Low-interest rates are good for the metals and bad for the dollar.
  • I believe the US government will do significant fiscal stimulus, which is good for the metals.