Since March 2001, the U.S. dollar has been under considerable pressure.

If you take a trip to Europe, New Zealand or Australia, you’ll find this to be readily apparent. The U.S. dollar just doesn’t go as far as it did four years ago.

The average American aware that the dollar is under pressure, but few Americans realize the magnitude of the harmful erosion of their hard-earned purchasing power.

Just consider that, in just a few years, the US dollar has depreciated more than 34% against the Swiss franc, more than 37% against the Euro and Australian dollar, and a whopping 60% against the New Zealand dollar!

Now take into account how the US dollar has faired against precious metals. Gold
had gone up more than 59%; silver more than 55%; platinum more than 43%.

The impact of the Twin Deficits (U.S. foreign trade and budget), geopolitical unrest, lower interest rates, higher crude oil prices, and a lackluster economy are already being felt.

It’s believed this wholesale loss of purchasing power for U.S. dollar-based
investors could be the precursor of bigger things to come. This is just a small Bull Market for precious metals. In the larger Bull Market for the next 3-5 years, you will see precious metals outperform not only the US dollar, but all the worlds other major currencies as well. So far, precious metals
have kept pace with other currencies or slightly outperformed them.

The pressures going forward are of a global nature. Higher crude oil prices will not just affect the dollar. Cars are being driven in Europe and Asia too. These economies are not immune to higher costs of all products that ultimately find their way to market via a gasoline powered vehicle.

There will be other global pressures felt as well. Lackluster economies are littering the
globe, but the U.S. isn't unique. Citizens of the World will be looking for alternatives to traditional investment strategies. And there has been a drop in Central bank sales of precious metals. This, combined with a continued decrease in producers forward selling, means more pressure on the mines to produce to a level that can satisfy the growing demand.

Other pressures that will increase the demand for precious metals:

The lifting of Japanese Bank Deposit Guarantee, as in 2002;

Opening of deregulated precious metals markets in China and India;

Exchange-Traded Funds make precious metals more accessible to the average investor

All in all, there are significant pressures being applied to the supply and demand equation of the precious metals complex. For investors, the good news is that they are almost exclusively geared toward increasing demand and reducing supply.

How do you take advantage of these opportunities? The answer lies in a mixture of gold and silver, with a weighting toward silver. At the present price levels, consider buying a cost-effective form of precious metals suited for a safe, inexpensive medium to long term holdings such as Perth Mint Certificates (PMC’s). PMC’s carry extremely low premiums, no storage fees for unallocated storage, and come with a government guarantee from the triple-A rated (Standard & Poor's) Western Australian government.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.