Stay Heavily Weighted to Oil

[dan_s]

One reason I believe everyone should stay heavily weighted to oil (and other "real assets") is because oil is an outstanding hedge against a falling U.S. dollar.

Recent gains by the U.S. dollar were quickly reversed last week as the Fed extended its pledge to keep interest rates low until late 2014, and even more significantly, signaled an intention to allow more inflation as a way out of the weak recovery and no-growth economy.

Markets reacted quickly, with the dollar reaching its weakest level in a month against the euro and gold surging to a nearly 10% increase for the month.

The likelihood of a QE3 (i.e., printing more greenbacks) is now greater than ever. At the same time, the Obama administration is pursuing a $1.2 trillion increase in the debt ceiling - over and above our already grotesquely huge $15.3 trillion dollar debt level!

Inflation and devaluation of the U.S. dollar is out there. It is just a matter of when.