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| Curent Advice |
The milestones of Dow 10,000 and $1,000 gold indicate a return to global prosperity and a weak U.S. dollar. However, there’s a growing danger of a dollar crisis as the Federal Reserve continues to pursue its "zero interest rate policy" (ZIRP).
"There are disturbing trends: huge imbalances, disequilibria, risks — call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot. The United States is skating on increasingly thin ice."
—Paul Volcker, former Fed chairman, 2005
Oil, gold and most commodities are priced in dollars. If the price of oil gets too expensive, it will impact the U.S. economy, and cause a secondary economic crisis and downturn. Higher oil prices, more than gold, is the danger.
Last month, Bank of America (BAC, $15.46), the country’s largest bank, reported a $2.2 billion loss in the third quarter. Revenues rose 32% to $26 billion, but it wasn’t positive enough to reverse losses.
Forecast on interest rates and income investments (50%)
From time to time, I’m approached by subscribers who want someone to manage their money. Investors should manage their own funds as much as possible, but placing some funds with a professional manager may be okay. I’m not against managed accounts per se, but let me make several cautionary notes and recommendations.
The greatest fear right now is that the Fed’s super-easy money policy will cause out-of-control oil prices and a collapsing dollar, and another financial crisis. And there’s the growing threat of national health care, massive deficits, and government regulation. Here’s what I recommend that you do this month:
At the New Orleans conference, I had the opportunity to spend several hours with Karl Rove, the "master political strategist" of the Bush administration, where he defended the Bush agenda in a raucous debate between Howard Dean, chairman of the Democratic National Committee, and Doug Casey, the fiery libertarian investment guru.
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