G&G Associates Tax & Financial Consulting
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Your Dollar Really Ain't Worth Much?
Karibu (Welcome) G&G Readers,
If you haven't figured it out yet, I'm a trader. I eat, sleep and breathe the $4 trillion Forex market on any given day. But that's just my night job…
Regardless… I get paid in U.S. dollars like 300 million or so other Americans. That means my I have to pay for groceries, gas, cable, water, etc. with dollars just like everyone else here in the U.S.
So like you, I have a vested interest when the U.S. dollar buys me less. In economic terms, that's known as purchasing power.
Now as a trader, I can tell you the dollar has lost against nearly all major currencies in the Forex market since the late '90s. But I'd like to step outside of the Forex world for just a moment and discuss just how the dollar has sunk beyond of the realm of currency trading, for all of you, who like me have to pay for your items with dollars…and explain the effects on your portfolio and your pockets.
2001 Dollars and 2011 Dollars Are NOT the Same Thing
Just to show you how weak the dollar is for consumers, let's look at how many "extra dollars" it now takes to buy things nowadays.
To illustrate this, let's review the common goods you would have purchased roughly 10 years ago (2001 actually).
How Currencies Have Jumped vs. the Dollar in the Forex Market
(From 2001 – Present Day)
Japanese yen: Up 57%
Aussie dollar: Up 51.9%
Swiss franc: Up 51.4%
Canadian dollar: Up 44%
New Zealand dollar: Up 31%
Norwegian krone: Up 26%
Euro: Up 22%
Swedish krona: Up 19%
An average house cost $129,000. Now it's $172,000 (33% increase)…and that's after the real estate market crashed in 2008.
A gallon of gas was $1.15 and now it's almost three times that at $3.15 (actually 274% higher)!
A loaf of bread was $1.26. It's now $2.79 (121% higher).
A dozen eggs cost 88 cents, now $2.89 (228% higher).
A postage stamp was 32 cents. Fast forward to 2011, and its 44 cents (38% higher).
What can we thank for the higher prices? Well, as strange as it sounds in this current post-recession, still deflationary environment, inflation stole your dollar's value over the last decade.
Why Most Americans Don't See the Dollar is Dropping
Inflation – especially over the years – is so subtle that most people don't notice.
It's a lot like boiling crabs in a pot.
If you drop a crab into boiling water, your crab will try to escape. But if you drop a crab into warm water, and slowly turn up the heat, the crab won't realize it and before they know it…they are boiling.
Guess who's the crab now? The American consumer.
The U.S. government and its close cousin, the Federal Reserve is pretty slick. They turn up the inflation heat by eroding your dollars slowly. But it's consistent enough to where your dollar is worth much less just 10 short years later.
Think about it. If I'd told you that tomorrow morning you will pay 274% higher for gas and 121% higher for a loaf of bread…you would freak out. There would be rioting in the streets. (A lot like what's happening in Tunisia today.)
Of course, the U.S. government knows that too.
So the Federal Reserve ratchets up inflation just fast enough to help their causes (like paying back their debts with cheaper dollars)…but they do it slow enough to where most Americans won't notice.
The Dollar's Purchasing Power Has Dropped 27% Since 2001
Now sure you can look at gas prices, and see inflation creeping back into the market. But the reality is the costs of EVERYTHING you need are going up astronomically and the dollars in your pocket buy less and less all the time.
What's even worse is that while the costs of goods are on the rise again…unemployment is hitting its highest levels in 26 years. So that means that companies won't raise salaries to keep up with the ever-rising cost of living.
And unfortunately prices are only going higher from here. In fact, in the next decade, prices could be another 50-200% higher than they are now.
Three Ways to Protect You and Your
Family Against the Falling Dollar
You don't have to be a Forex trader to be affected by the falling dollar. No, just make a trip to the grocery store or try to fill up your tank, and you also have a vested interest in how the dollar performs.
Now of course, none of us can stop inflation. But there is a way to hedge against it, and the falling dollar. Here are a few ideas how…
1) Diversify at least 20% of your portfolio into stronger foreign currencies including the Canadian, Aussie & Singapore dollar. You can do this easily with currency ETFs or direct access accounts if you're not ready to jump into FX trading.
2) Calculate how much you have to spend on stocks and bonds for the next year, and then drop 30% of that into gold or silver. Again, you can easily do this with gold or silver ETFs but I recommend getting physical bullion. Money in your hand is always better than in someone elses.
3) Look at your retirement plan. If your entire IRA is in dollars, consider upgrading with long-term foreign currency options.
Bottom line: The dollar is losing on all counts. As a trader, I can see the dollar's overall decline happening on a day-to-day basis. But as a consumer, you can feel the dollar dropping where it really hurts – your wallet. Take action now to protect yourself.
To find out what investments I'm talking about to protect your savings and diversify out of the dollar calamity that will occur, sign up today to become a G&G Investment Society (GGIS) today.
A one-year subscription costs $99. Your subscription includes:
#1. 12 Monthly issues of investment reports sent to your e-mail, called: G&G Investment Society (GGIS) portfolio. The second week of each month, I'll send you my monthly GGIS portfolio. I'll keep you up to date on exactly what's going on regarding the current and future financial crisis, and I'll show you some unusual and incredible ways to make money now and as it all begins to unfold.
#2. Research Report: The 4 Investment Assets You Do NOT Have to Report to the U.S. Government. Desperate governments do incredibly desperate things, so you should make sure you own at least one or two of the valuable assets that you do not have to report to the government. This is completely legal, and vital to getting rich in the coming currency crisis.
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#7. The G&G e-Newsletter. Also, twice a week, I'll send you the G&G e-Newsletter giving you my weekly email that details what I think are the most important financial events of the moment.
#8. Subscribers-only access. You'll also get subscribers-only access to my investment research archives. Right now, there are several other investments I recommend you consider buying immediately.
#9. 25% off discount 2010 Tax Preparation Services: All GGIS Subscribers will get a 25% discount in getting their 2010 tax returns prepared and for as long as you are a current GGIS subscriber.
I hope you agree that's fair. And I hope you take advantage of these opportunities right away. You will put yourselves among a very small group of Americans who actually come out ahead after this currency crisis unfolds.
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Until the next time,
Ankh Uja Snb (Life, Health, Strength),
Asar Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
757-251-0174 office
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LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. Nothing herein should be considered personalized investment advice. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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