Jim Rogers Paints Bleak Scenario

In a June 8 interview on CNBC Jim Rogers paints a bleak outlook for the US economy.  Much of what he says coincides with Ron Paul's 2008 book End the Fed.  Rogers is saying that he has NO US STOCKS. I am thinking in terms of high dividend yield stocks like Philip Morris (PM and MO) and Verizon (VZ). He thinks that the end of quantitative easing two, which is resulting in the stock market correction of the past few weeks (and it's bad today) will be followed by a QE3, resulting in a classic hyper-inflation and economic collapse.

It would be nice to hold the yuan, but Everbank does not make a yuan CD available.  I agree with Rogers about waiting for a dip to buy gold and silver. I'm crossing my fingers for $25 or $28 silver, in which case I will get back in.

I was just reading Murray N. Rothbard's What has Government Done to Our Money? which is an excellent, condensed version of his Mystery of Banking.  The issues that Rothbard talks about in his books, written several decades ago, are alive today.  Rogers's pessimism is realistic. But what to do? Foreign stocks haven't performed that well recently either. A collapse in the US economy will bring down the world.  BRIC hasn't been doing well, even if in the long run there is more reason for optimism in China and Brazil.

If there is another 2008 collapse it might be wise to recall what happened in 2008. The dollar went up, not down. I'm not a fan of the dollar, but the short term fluctuations that the Fed has caused are incredibly destructive to the small investor who risks his livelihood because of them.

The current Federal Reserve Bank system is a complete failure. Price instability, dozens of booms and busts since 1913, the Great Depression, the 1970s Stagflaton which hurt me personally, the recent financial crisis, the lack of jobs in America, the destruction of good jobs, all of this has come about because of the Fed and because of the legacy media and the failed two-party system.

Getting Rich from an Obama Presidency

The Democrats have inherited an inflationary mess from their sister party, the Republicans. A testimony to the Democrats' incompetence is that their leading economists are talking about the likelihood of "deflation" when the Republicans just doubled the monetary base on top of 2 1/2 decades of Republican monetary depreciation. Rather than make inflation into an issue, the Democrats complain that there isn't enough inflation. The reason is, of course, that their programmatic suggestions, to include Post Office- and New York City-Subway-style government health insurance and "spreading it around", require that our impecunious government spend ever more. As well, George Soros, Goldman Sachs, Morgan Stanley and Warren Buffett must be paid.

Here are a few pointers about inflation:

1. Buy without holding prisoners. It is time to buy the Lexus, Lincoln or Mercedes you have been thinking about. If you've been saving for a Lexus consider borrowing to buy one instead. Use the cash as a down payment on a leveraged investment.

2. If you are planning to retire, have some gold. My friend wants to keep gold under the mattress. He's holed up with a rifle, bars of gold and dry food. If you're not quite so paranoid, take a look at SPDR Gold TR (GLD) or Ishares Comex Gold Trust (IAU).

3. Consider a commmodity investment such as Powershares DBC Commodity Index Tracking Fund (DBC). This exchange traded fund tracks the Deutsche Bank Commodity Index, which is composed of light sweet crude oil, heating oil, aluminimum, gold, corn and wheat. Commodities have taken a beating this year with oil falling by more than 50% and gold falling about 34% (it is currently about 25% below its high).

4. Consider gold stocks. These have underperformed gold this year and so can catch up to the gold price as well as travel up along with the gold price during the Democrats' inflation. Some examples are Agnico (AEM), Eldorado (EG0), Kinross (KGC) and Randgold (GOLD).

5. Take a slice of Jim Rogers's thinking and buy his commodity index ETF, Market Vectors Hard Assets Producers ETF (HAP). Jim Rogers designed the index to take advantage of the global commodities boom. HAP began this past September (2008) and sold as high as 38 or so before falling to its current $23.93.

With an Obama presidency, it's going to be rock 'n roll time for commodities. Let's make some money!

Savings Accounts in Foreign Currency

Jim Rogers was on Bloomberg radio on Sunday morning at 6:25 am and he was talking about the dollar declines, Helicopter Ben's humming propellers and the Chinese stock market. Two of Rogers's ideas that caught my attention were investments in agricultural commodities and in the renminbi, the Chinese currency. Unfortunately, it is inconvenient for small investors to purchase Chinese currency because of the Chinese government's low-valuation strategy. However, where you can invest easily is in various currencies through Everbank. The minimum deposits range from $10,000 to $20,000 (for the indexes). Unfortunately, Everbank does not offer renminbi cds, but they do have 15 other cds including Hong Kong.

Powershares has commodity index products including a DB agriculture fund.

It is unfortunate that I cannot trust the dollar now, but given the irresponsible history of the Fed, I would rather keep my savings in another currency and/or secure it through commodities tracking investments.