by steam_cannon » Thu 03 May 2007, 16:32:02
$this->bbcode_second_pass_quote('chuck6877', 'W')ill my precious metal and energy mutual funds be OK if the dollar is replaced with the Amero?
I would think the companies would still have stock prices but they would just automatically convert to Ameros with me losing nothing.
For example the precious metal companies will still be selling gold and silver but it would just be priced in Ameros now and their stocks would still have value.
Is this a good assumption?
It depends. If the dollar collapses before switching to a new currency or if we switch to a new currency while our economy is still working.
Economic Collapse of the Dollar Causing Switch to a New Currency
Looking back out the Economic Collapse of the Soviet Union, Ukraine for example had a very difficult transition to its new currency. Everyone lost all their bank accounts and most paper assets. Things turned out better for the elite and people connected in the military. Ownership of some companies changed hands when solders marched into offices. My relatives there had enough money to buy a house in their bank account, but it was all taken by the government. They still had their silver teaspoons but that was about it. That is why today in Ukraine, few people put money into banks. There are banks still, you can put your money in, but few people use them. As an interesting consequence of this universal distrust of banks and paper money, banks there now also deal in precious metals, gold and silver.
So if the dollar collapses, expect your bank accounts to empty and contracts like gold stocks not to be honored. The US has enforced measures against people owning gold in the past and paper assets are probably the first thing that would be ceased.
Switch to a New Currency, before any collapse perhaps like the Euro
On the other hand, perhaps the new currency will be created more like the Euro? And the organization you own gold stocks with honors your ownership and accepts the new currency for gold, then that's a good hedge (for you). However, for someone who only owns dollars in their bank account, well if they are lucky their dollars will be revalued in the new currency, or perhaps exchangeable for the new currency, probably at a relatively depreciated exchange rate.
The thing is, the US has a high debt ratio, few assets and a shaky economy that is more like the Soviet Union prior to collapse then Europe Pre European Union. I think it would be nice if a more stable currency was introduced gradually and legally required to be accepted as currency in stores. I would also like it if it was a currency that was backed by silver/gold/assets. The thing is, if you want to take some risk and put your money into oil funds, gold paper assets, you can and you will do ok (not lose too much money) if we face a scenario like changing over to the Euro. However, if we collapse like the Soviet Union expect your paper assets to evaporate or be taken. So either way, it would be a good idea to hedge your bets with some hard assets. Perhaps some silver spoons.
But hey, this is all off the cuff here. Just my first thoughts. To be able to answer this clearly, you should read more about the economy of Europe at the time of the transition to the Euro. How the Euro differs from the dollar, asset backing... The crash of the Soviet Union and their transition to new currencies. The soviet like instabilities in the US economy. And of course about the announced plans regarding the Amero and other peoples opinions on it...
A currency that we can use in multiple countries is not a bad idea and may work out well. What ever happens, the dollar is going down, so this might be a good out for the US and in the long run provide better stability for the US economy.