So what exactly has been happening over the last month?
In a nutshell, the US has pretty much signed a death warrant for the Dollar. The only reason why the markets have been up over the last few months is because the Federal Reserve is artificially propping up the system in the aim of avoiding deflation. They've done this by injecting colossal sums of currency into the banking system (QE1,2,3 and Operation Twist). Now these measures temporarily help stocks and bonds, but they absolutely ravage the economy. They don't even print the full amount of money these days, they just type zeros into a computer and POOF, fake Dollars spring into existence and every new Dollar they create, immediately DEVALUES every other Dollar in the world. So in essence, by doing so, the US is secretly taxing the world through inflation. As a result, we shall soon see prices for pretty much everything we buy increasing. Food inflation will be a big issue in 2013…so watch this space.
I hate to be the bearer of bad news, but the world is crumbling and if you think the status quo will be maintained, you'll be sorely shocked in the next couple of years. After the US and German elections are out of the way, it's end game for the Euro. If you're heavily reliant upon stocks and shares, I seriously hope you know what you're doing and know every detail about the company you've invested in. Again, when war in the Middle East erupts within the next 6 months or so, oil prices will be affected in a big way. So filling your car up will will only become more expensive. But it's not all doom and gloom. Did you know that in 2006, £6 would buy you 6 litres of petrol or 1 ounce of Silver. But right now, £6 will buy you 4.6 litres of petrol, whereas that same 1 ounce of Silver will now buy you 23 litres of petrol! Silver is literally the silver lining. Not only is it a great investment in my opinion, it's a great way to protect your wealth and purchasing power. An insurance policy if you may.
Well, I hope this helps in some way. I've also included a very basic picture of what QE is below.
If you ever have any questions, please send me an email or pick up the phone!