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Business/Finance See other Business/Finance Articles Title: Here's How Much Cash You Should Hold Right Now Here's How Much Cash You Should Hold Right Now Free Download: "Super Crash Report:" Michael's reports are "required reading" among high net worth investors, who depended on his forecasts and advice through the 2001 and 2007 market crashes. Now he's just released his most critical update yet, and it's available to you for free. The Super Crash Report outlines in clear, express detail exactly what Michael is expecting in the next 12 months. Click here to download his report and get all of his research through Sure Money. By Michael E. Lewitt, Global Credit Strategist, Money Morning • July 13, 2016 Cash isn't the most exciting or dramatic asset you can hold, but, aside from gold itself, there's not much that's more vital or versatile – especially right now. Here's why… First, if you have cash, you can buy those distressed assets which have to be sold by overleveraged owners when they're forced to sell. In this way, when things go wrong, you're a "liquidity provider," much like Warren Buffett who famously made some of the best, most favorable deals of his entire life in the crisis years of 2008 and 2009. Buffett pulled off this coup by being flush with cash when hardly anyone else was. Cash also tends to hold its own against assets that are inflated by high levels of debt, like real estate and stocks are right now. It tends to depreciate against gold, but it will do much better than overpriced financial assets like stocks when the dam breaks. And of course, if things finally get so bad that even CNBC or Barron's admit as much, you can use cash to buy items essential to survival, like food, water, and a complete set of "The X-Files" Blu-ray discs. So I want to show you an unbeatable cash strategy right now. You'll see how much cash to hold at any one time, and just as important, how to hold it; there's more to "cash" than pictures of dead presidents. But in order to get all the advantages that a right-sized cash position offers, you have to understand why the dollar is strong and getting stronger… The U.S. Dollar Is the Oxygen of the Global Economy Everyone takes it for granted, but the "almighty dollar" determines the value of every single financial instrument in the world – stocks, bonds, commodities, real estate, art, collectibles, you name it. So when the value of the dollar changes significantly against other currencies, it causes the value of these assets to change as well. And that is exactly what started to happen in June 2014, and why the dollar is strong and will likely keep growing stronger. The value of the dollar is driven by monetary policy, which is set by central banks around the world. Central banks set policies that affect their interest rates and the value of their currencies. For example, if the U.S. Federal Reserve lowers interest rates directly (by lowering the federal funds rate) or indirectly (through QE), it lowers the value of the dollar because investors holding dollars will earn a lower interest rate on their dollars. In contrast, if the Federal Reserve raises interest rates (directly or indirectly), it raises the value of the dollar. The same applies to other central banks – if they take actions to raise or lower the interest rate paid on their currencies, the value of those currencies respond accordingly. Sometimes different central banks act together or in concert to lower interest rates and sometimes they don't. Right now we are in a period in which the Federal Reserve and other major central banks in Europe, Japan, and China are not only not coordinating their actions, but are often working at cross purposes, which has enormous consequences for the dollar. And in turn, what happens to the value of the dollar has enormous consequences for other financial assets. Let me show you a way you can track the relative strength of the dollar to determine whether you have enough cash. You can also use it to see what's coming next in the global economy. Post Comment Private Reply Ignore Thread
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