Published on December 06 2016

The Worst Thing to Happen to the U.S. Dollar Since 1913

Financial freedom could soon be a thing of the past…

At Casey Research, it’s our job to tell you about situations that threaten your financial well-being. Usually, these are direct threats to your wealth. Think a stock market crash or bond market collapse.

But occasionally, we'll tell you about other kinds of threats. Today is one of those days…

In this issue, we’re going to talk about the “War on Cash.” As you may know, this is an ongoing effort by governments to eliminate paper money. This war is being waged across the world…and it's picking up steam.

Italy and France recently banned cash transactions over 1,000 euros. Spain has banned transactions over 2,500 euros. Uruguay banned cash transactions over US$5,000.

But this upending of the global cash economy isn’t just a foreign affair. Former U.S. Treasury Secretary Larry Summers thinks the U.S. government should get in on the act, too. In February, Summers wrote an article in The Washington Post titled “It’s time to kill the $100 bill.”

• Politicians tell us the War on Cash is for our own good…

According to the government, only drug dealers and terrorists use big bills. If you get rid of them, crime falls.

Of course, Dispatch readers know this is propaganda. The government really wants to get rid of cash because it’s hard to track. It’s also harder to tax than the money sitting in your bank account.

And big bills are only the beginning. Eventually, governments want to get rid of all paper money. This will give them even more power and control over your finances than they already have.

• The government’s goal is to herd everyone into the digital financial system…

This will allow them to track every penny you spend.

Surprisingly, this doesn’t bother many people. That’s because a lot of people never use cash. They see it as a useless relic.

To them, digital money feels like “the future.” After all, everything is “going digital” anyway. These people will willingly surrender their financial freedom for the sake of convenience.

But Casey readers aren’t like most people. We value our freedom more than convenience, or even security.

We don’t trust the government when it says something is “for our own good.” That’s because the government almost never does what’s best for its people. Instead, it does what makes itself and its friends better off.

The War on Cash is no different. Today, we’ll show you how to protect yourself from this new war. But first, you need to understand why this is such an immediate threat to your livelihood.

• The War on Cash just entered a new phase…

Three weeks ago, the central bank of Sweden made an incredible announcement. It said that it’s considering its own digital currency. It even has a name for this new currency, the ekrona.

The ekrona would replace paper bills in Sweden.

Sweden is supposedly considering the move because its citizens are using less paper cash. Business Insider reported on November 16:

Cecilia Skingsley, deputy governor of Sweden's central bank Riksbank, told the Financial Times in an interview that the bank is considering the move after a dramatic drop in the usage of cash. The amount of notes and coins in circulation has fallen by 40% since 2009, with a rise in online shopping and card payments.

• Sweden will make a decision on the ekrona within the next two years…

During that time, its government will have to answer several key questions. The Financial Times reported:

There are considerable questions for Sweden’s central bank to answer about how a digital currency would work. Would individuals have an account at the Riksbank? Would transactions be traceable, unlike with cash? Would emoney earn interest?

Now, these are certainly major issues that need addressing. But despite these concerns, it wouldn’t surprise us if Sweden had its own digital currency within the next few years. We also wouldn’t be surprised if other countries went in the same direction.

• Digital currencies could soon become the new norm…

In July, the Bank of England published a paper on the “macroeconomics of central bank issued digital currencies.” The Bank of Canada has also looked into creating its own digital currency.

Given the current attitude toward cash, we expect other major governments to carry out similar studies.

Again, many people don't see this as a problem—but you need to realize something about these digital currencies. They would be very different than a cryptocurrency like Bitcoin.

You see, unlike the U.S. dollar or any other “fiat” currency, there’s no central authority that controls Bitcoin. That’s what makes it special. It’s why so many investors own it as an alternative to paper money.

But Sweden’s digital currency wouldn’t offer these advantages. It would only make it easier for the government to watch its citizens' every financial move.

• State-owned currencies aren’t a “good kind” of progress…

They’re a step toward less financial freedom.

Unfortunately, many people will happily go along with the government’s plan. They’ll say, “Who cares if you don’t have anything to hide?”

But not everyone who values financial privacy is a criminal. Some of us simply don’t think the government should be able to track our every move.

Fortunately for us, there’s still some good news…

• You can still protect yourself from the War on Cash…

The first thing you should do is own physical gold. As we often point out, gold is real money. It’s preserved wealth for centuries through countless financial crises. Plus, you can take a gold coin anywhere in the world and people will instantly recognize its value.

We also think that the value of gold could skyrocket as more countries try to ban paper money.

The next thing you should do is watch this brand-new interview with Casey Research founder Doug Casey. As Doug explains, the U.S. government has also been quietly planning its own digital currency. It could even “break ground” on the project within the next six months.

If this happens, Doug says it would be the worst thing to happen to U.S. money since the Federal Reserve was created in 1913.

Of course, if you know anything about Doug, you know he’s not going to lay down and surrender to the government. In this important video, Doug explains the four steps he’s taken to protect himself and his savings.

You, too, could be taking these same steps today. To see how, watch this FREE video.

Chart of the Day

Value stocks are “in play” again.

Today’s chart compares the performance of the iShares S&P 500 Value ETF (IVE) with the iShares S&P 500 Growth ETF (IVW). According to the iShares website, IVE tracks “large U.S. companies that are potentially undervalued relative to comparable companies.” IVW tracks “large U.S. companies whose earnings are expected to grow at an above-average rate relative to the market.” In other words, IVE tracks value stocks while IVW tracks growth stocks.

The line on the chart is a ratio of the two funds. When it’s rising, that means IVE is doing better than IVW. When it’s falling, that means IVE is doing worse than IVW.

You can see that the line started surging in February. It really took off after last month’s presidential election. This tells us value stocks are outperforming growth stocks for the first time in three years.

You might find this hard to believe. After all, U.S. stocks aren’t exactly cheap. The S&P 500 is trading at record highs AND stocks are expensive, according to many popular metrics like the price-to-earnings (P/E) ratio.

To understand what’s driving the rally in value stocks, we looked “under the hood” of these ETFs. We found that the recent breakout in value stocks isn’t that surprising after all.

You see, IVE is most heavily exposed to financials (25.5%), energy (13.2%), and industrial stocks (11.5%). These stocks have struggled the last couple years. They became cheap as a result.

These sectors also stand to gain the most under the Trump presidency…

  • The likelihood of rising interest rates and banking deregulation is lifting financial stocks.

  • The likelihood of looser environmental regulations has given oil, natural gas, and even coal stocks a boost.

  • And Trump’s promise to increase infrastructure spending has sparked a rally in industrial stocks, like construction and manufacturing companies.

Regards,

Justin Spittler
Delray Beach, Florida
December 6, 2016

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