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Why I Still Like the U.S. Dollar in a Crisis

Currencies / US Dollar Nov 30, 2010 - 11:51 AM GMT

By: DailyWealth

Currencies

Jeff Clark writes: "Where the heck is our emergency cash?" I asked, looking squarely at my wife...

The mountain of $20 bills I stashed away last year was now nothing more than a mole-hill.


"I needed the cash when the girls and I went to New York last month," she confessed, "and I didn't have time to get to the bank."

"But what if there was an emergency?" my kids gasped in unison. The look on their faces was sheer anguish. And it was priceless.

Even 8- and 10-year-old kids know you need cash in times of crisis. You need dollars.

Gold is nice, too. It's a store of wealth, a sleep-tight investment that'll come in handy when Armageddon arrives. But for crises that are somewhat less Armageddon-ish, dollars are more useful.

Think about it...

When terrorists flew planes into the World Trade Center, the dollar rallied 8% in six weeks.

When Lehman Brothers went belly-up, and the U.S. banking system was on the verge of imploding, the dollar jumped 10% in 10 weeks.

And last May, when a few algorithmic programs made computer trading go nuts on the New York Stock Exchange – resulting in a 1,000-point drop and recovery in the Dow in 15 minutes – it sparked an 8% rally in the dollar over the following six weeks.

How did gold do during those times? I don't know... I didn't check.

All I know is I've never had a problem exchanging dollars for any sort of goods or services. It didn't matter where in the world I was at the time. If I needed help, a greasy palm full of greenbacks always did the trick.

Of course, I understand the problem of fiat currencies. The folks in charge of the printing presses go nuts and purchasing power is destroyed. I get it.

But until Safeway is willing to exchange a basket full of groceries for my MS65 Saint-Gaudens gold coins, I'll keep a stash of $20 bills in my survival kit.

My point is... in times of crisis, when investors need liquidity, the world flocks to the dollar. That has always been the case. And, at least until Armageddon arrives, it will continue to be the case.

So in times of crisis... in times of emergency... I want to own dollars. You should, too.

Good investing,

Jeff Clark

Editor's note: Jeff is putting his money where his mouth is... in last month's issue of his Advanced Income newsletter, Jeff put on a super-safe bullish dollar bet that pays a 30% annualized income stream. To learn more about Advanced Income – and how to collect that income tax free – click here.

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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Comments

JL
01 Dec 10, 00:47
Dollar ?

The author's point seems to be that he doesn't feel we are headed for a major type of financial crisis that would warrant using precious metals as currency. All you know is you've never had a problem using US currency for goods and services? That's as weak an argument as I think anyone could come up with. The point is, if we are heading for seriously tough times, the things that worked in the past aren't going to work.


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