New Asian Union Means The Fall Of The Dollar

[jiimbergin]

Re: New Asian Union Means The Fall Of The Dollar

Depending on how much you have to invest, you might just consider US savings bonds.

Savings bonds have 2 components: a fixed rate and an inflation rate.

The fixed rate is now 0% (big surprise) but the inflation rates are a bit above 2% in the past 2 years.

Note that once you buy, the fixed rate is locked in forever. Inflation rates are announced every 6 months.

This isn't as good as buying a 30 year Treasury, but is far better than any of the shorter term investments in 2 ways:

1) The 10 year and less Treasuries are well under 2% right now, and if you buy then you're locked in
2) The savings bonds can be cashed in at any time. Treasuries before their maturity can only be sold as a security, and the value of said security varies widely with the prevailing interest rate.

I'd note that the iTulip portfolio is primarily short duration Treasury bills, and the interest rate on those is far, far less than the inflation adjustments on the savings bonds. However, EJ and so forth are investing hundreds of thousands of dollars or more and cannot go the savings bond route - each individual can only buy $10K in savings bonds per year (electronic) or $5K in paper.

I'd suggest paper as these can also be used for trade.

EDIT: I should note I am only referring to I series savings bonds above. EE series are just the fixed rate: i.e. 0%
EDIT2: I should also note the paper I series savings bonds can only be purchased now using your tax refund. Yet another factor to plan for.

I thought EJ went to a short duration treasury in late 2008 or early 2009 and then went back long (10 years) in mid 2009. I found the link when he went long treasuries it is in

http://www.itulip.com/forums/showthr...806#post104806. The last sentence in that commentary is

"At this point the only change we plan to make to our 30% gold and 70% Treasuries position is to move from the short to the long end of the Treasury yield curve. Later in the year, after we see how the Fed crashes the markets with its first attempt at withdrawing liquidity, we will enter the energy sector selectively."