George Haligua Devaluation of the US dollar and Inflation of Energy Prices

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) May 2, 2005 -- Many believe the Fed's current position toward increased interest rates will thrust the dollar higher, but on the contrary, these rates will increase the trade and federal deficit and will cost the government and consumers a price unlikely to be accepted, the penalization of the entire economy.

Another crucial matter is the weak US dollar. The current decline in the US dollar has several facets of importance. The results of this current decline will increase in US dollar terms, the dividends on Canadian energy stocks. Nasdaq, S&P 500 and bonds will follow the declining trend which will ultimately increase interest rates. Moreover, the precious metals bull market will pick up pace and finally crude oil prices will continue to rise.

The reasons to buy gas and oil are numerous, firstly they are heading towards significant increases. The current rising conflicts in the Middle East have locked in a sort of panic premium. The prices we are seeing will continue for a long time and will only drop after a few consecutive years of peace in the region.

The current gap between supply and demand is growing because of Asia and the United State's requirements over the last year which raised the global demand to 2.5 million barrels per day. Additionally, due to the record rates of industrial development in both China and India, we are seeing energy consumption skyrocketing. As global production arrives at its apex, we are left with the notion of whoever gets the supply will pay higher prices.

We are also seeing the troublesome signs of inflation again. The price of energy directly relates to the price of all consumer goods, as everything that is shipped requires some type of fuel and as the fact that crude oil prices have increased, many wholesale suppliers are already adding surcharges. The CPI is false, don't bother with it, most informed people know that the government's official rate of 2.5% is more than slightly skewed.

The devaluation of the dollar will continue until short term interest rates increase at the same pace as inflation and to at least the same level as the real rate of inflation or else the dollar will continue its downward decline. In my possibly optimistic opinion for a downside target is to see the US dollar index fall from 90.00 to 60.00.

A profit can still be made in the devaluation of the dollar- rising inflation period, but an adjustment in judgment will be required. The devaluation of the dollar- rising interest rates are ultimately negative for bonds. This is the adjustment in judgment that is needed. Saying this, in my opinion we are going to see over the next 24 months long term rates rise from 4.32% to above 8%.