Imagine the U.S. dollar hitting rock bottom. Riots in the streets. No jobs. How do we all survive? If the dollar is worthless how do profits from precious metals help me? I am really confused. It is great to see my money growing. But if all hell breaks loose, how do a turn my million dollars into something that I can use?
The most appropriate way to deal with this issue is by diversifying among various strategies (approaches). At the moment we think there is high probability that Canadian, US and Australian securities exchanges will survive as a viable marketplace for precious metals stocks. If they collapsed, we believe that this shock would push prices of physical metals much higher, thus making up for the losses on the paper markets. Moreover, please note that if you own a stock that gives you more rights than just a derivative instrument. Being a shareholder means owning a part of the company. Even if the USD is destroyed, you still own a part of a company, which mines something that has just most likely doubled in price or so.
Is it really a problem if you can’t value your shares using dollars? The company: managers, employees, machinery etc. would still be there. The odds are that even if there is no USD, we would still have some form of money – not that we would go back to the barter system. Since that would most likely be the case, the stock might not be priced in USD, but in some other form of money. Consequently, we doubt that stock investments would become worthless even if the dollar collapses.
In other words, we think that using paper markets for leverage is a good way to go, as long as one remembers to have physical precious metals as well.
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