Signup for our free newsletter:

The Obama Stimulus Plan

Written By Brian Hicks

Posted March 25, 2009

Last week I told you how to make money off the Obama stimulus plan.  

This week I’m going to show you how to protect your portfolio from the Obama stimulus plan! 

The Obama Paradox 

I run in some fairly obscure financial circles. A lot of my contacts are global. . . an Iranian trader who practices his craft in a Central American nation. . . a globe-trotting Greek who builds yachts in China. . . a cowboy who owns more mansions than a Saudi prince. . . a survivalist who grows and kills all his food. . . and a handful of brokers, hedge fund managers, and entrepreneurs from Kiev to Calgary.

You’ll never see their names in the Wall Street Journal. . . or see them eating at Spago. They are low-key players who shun the limelight. 

And for good reason. 

In terms of winning investments, they are always ahead of the crowd.  

Among these market players, the opinion is unanimous: it’s amateur hour at the White House. . . and this keystone cop approach to the financial crisis will result in the final death knell of American supremacy.  

There is a silver lining though: 

      They all think there’s a window of about 3 years left to become rich, to get out. . . and then protect your profits. 

Last week I showed you 3 ways to make money from the trillion-dollar stimulus plan: 

  1. Argentex (AGXM – OTCBB). . . Up 21% since last week’s recommendation
  2. SunPower (SPWRA – NASDAQ). . . a gain of 10%
  3. PowerShares Dynamic Building and Construction ETF (PKB). . . up 4%

In the case of Argentex, whose mine could be a major source of indium for the solar energy market, its stock is up 216% since the election of Obama. 

The Push Toward a New Reserve Currency

I know what you’re thinking: Why 3 years? 

Because they think that’s about the time it would take for a new world reserve currency to be created and implemented into the global economy.  

It took Europe 6 years to introduce the Euro currency. Under a crisis situation, my group thinks the other major global powers could do it in half the time.

According to a Reuters piece that ran last week…

“China and other emerging nations back Russia’s call for a discussion on how to replace the dollar as the world’s primary reserve currency, a senior Russian government source said last Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.”

And then on Monday the Financial Times reported that the Chinese are serious…

“China’s central bank on Monday proposed replacing the U.S. dollar as the international reserve currency with a new global system controlled by the  International Monetary Fund.”

In an essay posted on the People’s Bank of China’s website, the central bank’s governor Zhou Xiaochuan said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.”

Uh oh.

Think about that for a second. The federal budget depends on an endless stream of lending by foreigners. China, Japan, and Russia have lent America tons of dough because the U.S. dollar is the world’s reserve currency.

If the other powers agree on creating a new reserve currency to replace the dollar, it’s game over for America.

Done. Finito. Kaput.

In fact, one legendary investor is betting on just that: John Paulson. . .

Gold: the “Ultimate Safe Haven”

Paulson made billions shorting subprime mortgages at the height of the housing bubble. Now he appears to be betting on the destruction of the U.S. dollar.

In what could be considered a “doomsday” trade, inflation play, or a bet on the implosion of the U.S. dollar, Paulson now has quite a large position in gold by way of gold companies.

It was recently reported John Paulson’s hedge fund Paulson & Co has taken a $1.28 billion stake in AngloGold Ashanti. He took an 11.3% stake at $32 per share and is now the company’s 2nd largest shareholder.

I think you should do the same. At least 5% of your portfolio should be in gold.

Gold is the ultimate safe haven. I personally own physical gold as well as a position in Greg McCoach’s gold’s “Doubling Effect” strategy. I consider it the one way to protect my portfolio from the federal government’s spending orgy.

Greg reveals his strategy in this free report:

Profitably yours,

Brian Hicks 
Publisher, Wealth Daily