Dollar Diagnosis for 2005
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Imagine you're at your doctor's office for a checkup. It's been a rough year, but now you're feeling pretty decent.
"Sorry," your doctor informs you, "your condition looks grim."
You're shocked. "What do you mean? I feel just fine."
"You may feel fine," he shakes his head, "but I know better."
Warren Buffett, <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />America's Superstar Investor, sounds a lot like that doctor right now. He's finishing his examinations, shaking his head, warning hopeful investors that, despite forecasts to the contrary, the dollar's condition still looks grim as we move into 2005.
And he's putting his money where his mouth is. To the tune of $20 billion in euros and other foreign currencies. Actually he's putting additional money where his mouth is: Buffett's anything-but-the-dollar investment strategy is up $8 billion from his 2004 expenditure.
It's already paid off, too. Buffett started investing in the euro when it was just 86¢ U.S. Now it's worth $1.33 and he's still investing. Despite the typical TV talking-head optimism, Buffett only sees America's dollar woes continuing as we head into the new year.
Why the Dollar Will be Down and Gold Up in 2005
According to Forbes magazine, Buffett blames the dollar decline on bad policy, both presidential and congressional. Apparently, so do foreign markets. Since the Bush re-election, the dollar has fallen a dramatic 4.4 percent. "If we have the same policies, the dollar will go down," Buffett duly observed.
What about current antidotes for the sick dollar? Buffett remains skeptical. Higher interest rates will merely "put off the day of reckoning," he was quoted in Forbes as saying. And central bank intervention will fall short, too. "Sooner or later, markets win over the interveners. The interveners always run out of gas," he said.
So what's the solution? Buffett referred to the writings of David Ricardo, a 19th-century trade theorist, when he said, "In those days the trade imbalances got settled in gold and when they ran out of gold, people stopped doing business with you."
Indeed, gold has been the currency-of-last-resort. It has remained so since 700 BC. From that point on, a lot of paper currencies have come and gone.
But adding gold to your portfolio this year is not a bet that the dollar will fail. Instead, it's a frank assessment of 2005's economic trends. Over the last few years, a shaky dollar has been shown to stimulate the price of gold. More shakiness in the 2005 dollar will only bump the price of gold more.
If you think about it, we're lucky to even have an effective hedge against the dollar. So before getting much further into 2005, before the value of your assets droop with the dollar, diversify your portfolio by contacting Lear today. We can show you the most effective forms of gold for your specific situation. Plus we'll send you your Free Gold Investment Guide and Lear Retirement Guide.
Warren Buffett just gave you a major clue about what will work in 2005.
Go take him up on it.
Gold currently trades far below its fair market value. Yet it's experiencing one of the greatest world-wide increases in demand. At the current price of around
$ 421 /oz., gold represents a tremendous buying opportunity!
As our budget deficit heads higher, global financial power shifts and U.S. investments remain uncertain, gold must go up. The long-term outlook for gold is extremely positive!
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