Investment U

New York, NY October 3, 2005 /PRNewswire - Foreign governments have been bailing out the U.S. for several years now, buying up 70% or more of our federal debt. At one point, they were financing our ballooning deficit to the tune of $4 billion a day.

Selling our debt to overseas banks, however, is getting harder… all too quickly, says Dr. Mark Skousen, an economist and advisor for http://www.investmentu.com.

Debt purchases have started to decline precipitously, from a peak quarterly rate of more than $400 billion in early 2004, to just $100 billion in the most recent quarter. At the same time, the federal deficit is expected to reach more than $500 billion in fiscal 2005. More debt, fewer buyers… a double whammy. Check this out:

http://www.investmentu.com/aboutiu/WorldFinancialSeminars/Images/Treasury.gif

The sharp slowdown in foreign purchases of U.S. debt will force the Treasury to raise interest rates to keep governments from unloading their T-bonds.

Already, central banks from China to Argentina are quietly shifting to non-paper assets, specifically gold and precious metals, to diversify their portfolio.

Now here’s what we can do to protect our personal positions…

Investors must arrange their financial strategies to prosper during this paradigm shift. Gold is the best indicator of global instability. The fact that it has been rising steadily in price since 2001 should be a wake-up call. In fact, last week gold hit a 17-year high of $470 an ounce.

Here are two tactics to consider:

1. Increase your precious metals holdings: Buy gold, and especially silver and palladium stocks. (Palladium is the cheapest of all precious metals; it has fallen 80% in value since 2000, but is now staging a comeback.)

1. Take profits on your income investments: Reduce your holdings of Treasury securities, municipal bonds and municipal bond funds.


For more information on these strategies please contact Juan Muñoz at jmunoz@oxfordclub.com


Dr. Mark Skousen is an economist who has taught finance and economics at Columbia Business School, Barnard College at Columbia University, and Rollins College in Winter Park, FL. He is editor in chief of Forecasts & Strategies – an award-winning investment newsletter – and three trading services. He recently was nominated as the Chairman of Investment U, a free educational financial e-letter with more than 275,000 subscribers. For more information about our editors, or to set up an interview, please contact Juan Muñoz at 410.223.2693 or jmunoz@oxfordclub.com, or visit http://www.investmentu.com.