A Five-year gambit.
I am a Federal employee who contributes regularly to the Thrift Savings Plan. I am also enrolled in the other FERS perks (life, health, retirement.) I am watching with growing unease the deteriorating condition of the US economy in general, and the US Dollar in particular. I have an idea as a strategy to keep me from being completely wiped out should the bottom fall out. The plan is after the jump:
A Five-year gambit.
Here's the plan:
- Borrow $50,000 from my TSP account. (5 year note at 6%.)
- Go on the Overtime Desired List to make the payments on the note.
- Purchase:
$15,000 in gold, take delivery of the metal.
$25,000 in Euros, invested in 6 month CDs
$10,000 in Renminbi, invested in 6 month CDs
This amounts to a striaght-up currency play. If the dollar implodes, this has tremendous upside potential, in that the Euro and gold will both rise. Additionally, when the PBOC cuts the anchor cable linking the Renminbi to the dollar, the Renminbi could have more pop than ammonium nitrate. I take the $50,000 out of the post-collapse accounts to retire the note early and keep the remainder as profit. Should the dollar rise, losses are mitigated by the fact the earnings on the certificates of deposit, but are augmented by the drop in gold. I can still repay the note in payroll deductions, and I still have investments in gold, Euros and Renminbi to reinvest.
Factors that could trigger Dollar collapse (feel free to add to the list):
* Opec - Reprice oil in Euros
OR
* Foreign Central Banks - Divestiture of US Treasuries
OR
* US-Sino relations - a tiff over Taiwan
OR
* Europe, China, OPEC and other Asian nations concoct a scheme where they all win and America loses.
OR
* Treasuries Yield Curve inverts
Factors that could trigger Dollar recovery (feel free to add to the list):
* Bush Tax Cuts expire
AND
* Social Security Piratization dies on the vine
AND
* Yield Curve does not invert
So the question is:
Have I completely and unredeemingly LOST MY MIND? Or is this in any way sensible? Or, would it be better to make the changes that you recommend below?