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Don’t Miss Your Opportunity To Prepare For A Dollar Crisis (Video)

By Samuel Bryan Dr. Ron Paul hosted Peter Schiff on his Liberty Report this week. They discussed the failures of the Federal Reserve and how its policies have subsidized an irresponsible federal government. While the long-term effects are going to be disastrous for the U.S., Americans still have a chance to protect themselves from an inevitable currency crisis. If they prepare wisely, they may even profit from the coming collapse. “I do believe this window of opportunity will be rapidly closing. People need to act quickly to get out of U.S. dollars, to accumulate foreign assets in places like Switzerland or Singapore or New Zealand, to buy some gold , buy some mining stocks. Do that before the bottom really drops out of the dollar, when everybody else finally wakes up to the reality, instead of the fantasy world they’ve been living in…” Highlights from the interview: Peter: I’m surprised [this dollar crisis] hasn’t happened already. But I think it’s because the rest of the world has just been so brainwashed by the mainstream media, by the central bankers, by Wall Street, that they just haven’t figured out the problems that the Federal Reserve has created over the last seven years, with three rounds of quantitative easing and zero-percent interest rates. I think the U.S. economy is poised on a much bigger cliff than the one we went over in 2008. You and I know it was the Federal Reserve that laid the foundation for that crisis. Now, with the same policies – only worse, they’ve laid the foundation for a much greater crisis… I do believe this window of opportunity will be rapidly closing. People need to act quickly to get out of U.S. dollars, to accumulate foreign assets in places like Switzerland or Singapore or New Zealand, to buy some gold, buy some mining stocks. Do that before the bottom really drops out of the dollar, when everybody else finally wakes up to the reality, instead of the fantasy world they’ve been living in… Dr. Paul: It seems like there are so few of us out there emphasizing the Fed… What’s the ultimate solution to the Fed? Peter: You’re a medical doctor. When you have a cancer, there is no superficial treatment. You’ve got to remove that cancer or the patient is going to die… We need to get to the root cause of the problems. We need major surgery… The Federal Reserve is at the heart of it, because the Federal Reserve is enabling government. It’s subsidizing it. It’s making it possible to run all these deficits. It’s propping up Wall Street. It is basically giving us the novocaine to numb the pain, so we can let the disease get worse without actually doing anything about it… Dr. Paul: Some people approach me with the question, “What should we do? Keep our money here and work it out here? Or go overseas and do some investing overseas?” Some people will even say Europe is a shaky place… What’s your answer to that? Peter: Fortunately, the world is a big place. It’s not all just U.S. and Europe. We are underweight Europe too. I am cognizant of the problems in Europe. I just think ours are even bigger… Ours are being obscured by the fact that the dollar is still the world’s reserve currency, so we get to profit by everybody else’s mistakes for now. Everybody buys dollars when they’re worried about problems, even though our problems are bigger than the ones they’re worried about in Europe. Because the dollar is overpriced, we get to buy imports cheaper. We can keep these artificially low interest rates. We get to live beyond our means. There are countries you can invest in. In Europe, there’s Switzerland… They’re not doing everything perfect, but they’re in a much better shape than the Eurozone or the U.S. We invest in places like Singapore, countries like New Zealand. Nobody is doing it perfectly. You have to figure out which countries are making the fewest mistakes, which countries have the most economic freedom, the fewest regulations, the lowest taxes, the soundest fiscal policies, the less reckless central banks. No one’s on a gold standard – it’s all fiat money. But it’s a question of degree… To hedge ourselves against all countries, we buy gold… The average investor doesn’t have anything in gold, and I think that’s completely foolish. You have to be completely ignorant as to economic history to be so complacent as to have no money in gold… Dr. Paul: In Austrian economics we’re taught that it’s harder to predict the exact timing. You and I would be convinced that we don’t know exactly what the price of gold will be tomorrow or one week from now. We do know trends. We do know that low interest rates and artificially inflating the currency has consequences. Nevertheless, I’m sure you’re asked and you have to plan for it, and I’m asked this all the time – I want to know: when it’s going to happen. There are bubbles out there, but it’s different now… Do you ever get a little more specific? Peter: You always get in trouble when you try to put a time on it. More often than not, you overestimate the ability of everyone else to figure out the problem. I obviously know we’re a lot closer to the endgame than we were a few years ago. I think there’s a lot of signs that we’re getting closer, based on the fact the Fed has backed itself into this box… I tell people you got to be early. If you’re not going to prepare early, you’re not going to prepare at all. You’re not going to finesse it perfectly. So if you’re not too early, you’re too late. You can’t afford to be too late. Currency crises come quickly. The value is lost, and it can never be retrieved…

Consider Adding Some CRAK To Your Portfolio.

Summary The Market Vectors Oil Refiners ETF launched this week is a compelling play in the energy sector. I conduct a review of the ETF itself and the opportunities & risks associated with the ETF. I believe CRAK is worth considering because of its strong performance in comparison to other energy segments. In this article, I will be reviewing the new Market Vectors Oil Refiners ETF (Pending: CRAK ), which launched yesterday. I believe investors should consider adding some CRAK to their portfolio because the refiners have been the lone bright spot over the last year when oil prices have collapsed. The following chart from the CRAK fund profile page shows that refining and marketing stocks are the only sub-segment of the energy sector (NYSEARCA: XLE ), which has posted a positive return over the last year. Crack Spread One of the most important things to consider when looking at refining stocks is to look at the crack spread. The crack spread is the difference between the cost purchasing the crude oil and the price of the products that the crude oil is refined or “cracked” into. I created the following chart using the ThinkorSwim platform that has the crack spread plotted over the last two years, as well as the performance of Valero (NYSE: VLO ), which is one of the largest holdings in CRAK. The chart shows that over the last two years Valero’s performance [Blue Line] has been highly correlated to the crack spread. (click to enlarge) [Chart from ThinkorSwim Platform] Opportunity The opportunity for refining stocks is promising because crack spreads are higher than a year ago, which will show up in the form of year/year earnings growth. In a troubled energy environment where oil companies/drillers etc cannot earnings, the refiners stand out above other energy segments. Using Valero as an example, you can see in the chart below for the last four quarters, EPS has been trending upward, even as oil prices had fallen to near $40, went back to $60 and are now back at $40. As long as the crack spread remains somewhat stable at these elevated levels, the refiners will continue to outperform the rest of the energy sector. (click to enlarge) Risks The primary risk of CRAK is that it is highly concentrated within its top 10 holdings. The top 10 holdings account for nearly 65% of the portfolio, therefore when considering CRAK investors should be comfortable with this fact and the underlying companies that are in the top 10 holdings. Second, another item to watch for is currency risk. As the following chart from the portfolio analytics section of the CRAK fund page shows, CRAK has a large international currency exposure. With nearly 50% of CRAK priced in foreign currencies investors who are also, bullish on the dollar could potentially pair a purchase of CRAK with the small-hedged position in the PowerShares DB USD Bull ETF (NYSEARCA: UUP ) or the WisdomTree Bloomberg U.S. Dollar Bullish ETF (NYSEARCA: USDU ) to mitigate the foreign currency risk. Closing Thoughts In closing, because CRAK just launched this week and I believe it should be added to investors watch lists for a period to make sure there is interest in the product. If there is adequate volume and CRAK attracts assets the refiners are a compelling choice when considering investing in energy because they have performed very well during this tough energy environment in comparison to other energy sector segments. Disclaimer: See here . Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Share this article with a colleague

GLD – Getting On The Record With The Gold ETF

I altered my outlook for gold on Christmas Day, moving from a short view held from September 5 to a long view at what turned out to be perfect inflection. Since marking highs in January, gold and the GLD have again given way. The catalyst working against gold has been a strengthening relative dollar value, I believe greatly on concerns about the euro and Greece’s disruption to it. I see the Greece issue being resolved favorably near-term, and I believe the relative weakness that will follow for the dollar will again lift gold and the GLD. While some risks exist against my view, I see most of those either balanced or priced into the value of gold and the GLD at current levels. On Christmas Day 2014, I ended my short opinion on gold and gold relative securities with the publication of this report, Gold Outlook for 2015 – Buy & Hold Here . I also suggested the best way to play a reversal in gold was through the Market Vectors Gold Miners (NYSE: GDX ). But I never got on the record with my SPDR Gold Trust (NYSE: GLD ) followers, some of whom may not be aware of my positive turn. At this point, after a pull-back from a high price point of above $125 in January, and currently trading at roughly $115, I see current value marking a near-term bottom in the SPDR Gold Trust , and can suggest purchase of the gold security again. I believe gold prices should stabilize and rise from here, as the value of the dollar gives way against major foreign currencies. Though I see some risk that capital could flow heavily into U.S. equities, and potentially draw from gold investments over the short-term, I see gold and the GLD security good to go long-term. Even as the Fed raises interest rates this year, I still anticipate the dollar will give way and allow gold to go higher long-term, as Fed transparency has greatly priced this fact into the dollar already. 3-Month GLD Chart at Seeking Alpha The chart here shows the early year run up of gold from lows marked at the end of 2014, before giving way again more recently this year. I ended my negative outlook for gold initiated on September 5, 2014, and turned to a positive perspective for the commodity on Christmas Day. I just about perfectly captured the inflection point you see in the chart above in doing so, similar to how I did at the start of 2014 and in September of 2014. But since marking highs in January, gold and the SPDR Gold Trust have backed off a bit. This report marks my first published article on gold and relative securities since my early calls to buy and serves as an important reassurance to metals investors about my long-term view from this level. Today, trading near $115, the SPDR Gold Trust suffers from the recent strength of the dollar gained on the euro and yen. Against the yen, a recession in Japan and extraordinary central bank steps in that nation allowed the dollar some room to grow. Against the euro, the economic deceleration of Europe and the extraordinary actions of the European Central Bank (ECB) did the same. But the question raised about Europe more recently, due to the disruptive elections in Greece and its new government’s push for alterations to its bailout agreement, have given an extra lift to the dollar this year. Fear of a Greece exit from the eurozone has been overblown, in my opinion, and has been the thesis for a slew of investment recommendations I’ve made recently for and against other securities. For instance, I see the PowerShares DB US Dollar Bullish ETF (NYSE: UUP ) dropping to $24 soon. That move would come on relative dollar weakness, which would also lift gold up again. Relative Securities YTD TTM SPDR S&P 500 (NYSE: SPY ) +2.2% +16.3% PowerShares DB US Dollar Bullish +3.2% +16.0% SPDR Gold Trust +1.6% -9.1% iShares Silver Trust (NYSE: SLV ) +3.9% -25.2% Market Vectors Gold Miners +8.4% -22.5% As it pertains to the SPDR Gold Trust and gold prices, I believe that when the Greece question is answered favorably, possibly as early as today (Friday February 20th) and surely by February 28th, the dollar will start to give way to the euro. The dollar has already shown signs of wanting to do so and U.S. interest rates have likewise risen from recent lows. However, the saga has continued and the catalyst for a move is still chained, with pent-up energy waiting for a true and definite resolution. The dollar has had other reasons to give way recently. Japan just reported that it has formally exited recession, though the Bank of Japan remains likely to stick to its extraordinary easing strategy near-term. Europe is seeing signs of economic improvement as well, and many of its markets have already enjoyed a rally, with only Greece and Spain lagging due to political uproar. The recent peace accord in Ukraine offers hope that some geopolitical stability may be in the offing. All these developments support my thesis along with the catalyst I see in a Greece resolution. Risks exist against my thesis as well. The U.S. Federal Reserve remains on a path toward raising interest rates, but I believe much if not all of this probability is priced into the dollar and thus gold prices. The Fed has so well telegraphed its moves, thanks to its efforts toward transparency, that few will be surprised when the Fed finally does start to raise rates. And let me remind the reader that interest rates are at historic lows and abnormally low considering the strength of the U.S. economy. At this point, some argue, it is irresponsible not to raise interest rates and that the Fed flirts with future risk of inflation. Secondarily, terrorism in Europe has become a reality and could drive another flight to quality to the U.S. dollar, and thus is a threat against this thesis. However, one might argue that the same risk is likely intensified now for the United States, which is stepping up its own efforts against the Islamic State. Finally, if a Greece resolution occurs, it should also drive a rally in U.S. equities in my opinion. There is risk that gold could serve as a source of capital to fund it. I would argue that U.S. treasuries and other near cash assets are more likely to serve that purpose, especially given gold’s benefit from a weaker dollar. As a result, I see the risks here priced in and/or balanced. I feel comfortable recommending the SPDR Gold Trust at this value, after showing signs of stabilization here at an important technical support which likewise exists for gold here. The world is not a united utopia today, and humans will continue to reach for gold as a default currency against the risk of imperfectly government backed and risky fiat currencies. Gold has increased in use as a reserve currency, increasingly replacing the dollar in many central bank stores, offering indication of what I suggest. The dollar has become overextended in my opinion, due to the Greek scare and the previous weakness of Europe and Japan. However, those factors are now giving way, and the dollar should as well, allowing gold and the SPDR Gold Trust to gain. I follow gold closely and so investors in the sector may find value in following my column . Disclosure: The author is short UUP. (More…) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.