Jack Barnes

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We Want to Hear From You: Are You Prepared for the Global Currency War?

The housing market remains in the dumper. U.S. stocks - despite a rally - are still 22% below their record highs of two years ago. And the "official" unemployment rate remains at a heart-stopping 9.6%.

With their knees almost ready to buckle under such burdens already, how will American consumers respond when clothes, computer accessories or other key consumer staples at their neighborhood Wal-Mart Stores Inc. (NYSE: WMT) undergoes an overnight price hike of 30% to 60%?

As the United States aims to increase exports by debasing the dollar, a global currency war is underway that could swallow consumers and investors if they don't prepare for the likelihood of a weaker dollar.

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Currency War Heats Up as Japan Lowers Interest Rates to Devalue Yen

In a move designed to jolt its economy back to life and protect its export industries from an international currency war, the Bank of Japan (BOJ) said yesterday (Tuesday) that it would expand its balance sheet and lower its benchmark interest rate to "virtually zero."

The bank cut the overnight call rate target to a range of 0.00% to 0.1%, the lowest level since 2006. It last cut the target rate to 0.1% from 0.3% in December 2008.

Policymakers also will establish a $60 billion (5 trillion yen) fund to buy government bonds and other assets, inflating the balance sheet at a time when U.S. and U.K. central bankers are contemplating doing the same.

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You Heard It Here First: A Global Currency War is Being Fought - And There Will Be No Victors

Brazil's finance minister, Guido Mantega, recently acknowledged to the global investment community what most trade officials already believed: An "international currency war" has broken out.

And, in this war, there won't be a real victor.

"We're in the midst of an international currency war, a general weakening of currency," Mantega told The Financial Times. "This threatens us because it takes away our competitiveness."

Mantega's comments came just weeks after Japan joined Switzerland in intervening in the foreign-exchange market. But the reality is that the currency war has been under way since 2008.

At least, that's when Money Morning Chief Investment Strategist Keith Fitz-Gerald first warned that countries - most notably the United States - would debase their currencies in a race to boost their exports and keep economic growth afloat.

"The government has adopted a weak-dollar policy," Fitz-Gerald said in an interview in March 2008. "They're sending out a message loud and clear: 'We want you to sell the dollar.'"

By holding the central bank's benchmark lending rate down in a record low range of 0.00% to 0.25% for close to two years now and buying up Treasuries in a policy known as "quantitative easing," the U.S. Federal Reserve is effectively debasing the dollar.

But the U.S. central bank isn't alone.

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Seven Ways to Profit From the Worldwide Currency War

If you're like me, and you spend a lot of time perusing financial Web sites in search of the latest global investing news, you've probably started to see a lot of stories about rapid shifts in foreign exchange rates - including some "currency pairs" that have traditionally been rather slow-moving.

Back during the spring, for instance, the news was full of stories about how Switzerland was buying up European euros in an effort to weaken the strong Swiss franc - only to have that country change course and diversify its holdings by purchasing U.S. dollars.

During the summer, we watched as Japan entered the foreign exchange (or "FX") markets for the first time in nearly a decade in order to buy U.S. dollars.

Even South Korea has been a contestant in the currency-transaction arena, with that Asian tiger working to weaken its currency, the won, in an effort to improve its exports. Just yesterday (Monday), the won rose for the sixth-straight day, its longest winning streak in eight weeks, after the nation's foreign-exchange reserves climbed to a record $290 billion.

These events aren't random. But they are related. They're part of a worldwide currency war that's being waged before our eyes - and that will prove very costly to investors who don't recognize the game that's being played. Fortunately, we do - and we're going to tell you all about it.

To find out about those profit plays, please read on...

To find out about those profit plays, please read on...

Buy, Sell or Hold: It's Time to Park Harley-Davidson Inc. (NYSE: HOG)

Harley-Davidson Inc. (NYSE: HOG) may well be the ultimate U.S. corporate icon.

The company's motorcycles are certainly American cultural icons: Big, squat, slathered in chrome, they're essentially functional pieces of fine art. Each motorcycle emits a deep, staccato bark at idle, a signature sound that prompted aficionados to christen Harley bikes as "hogs."

The fact that "Hogs" have been owned and ridden by such celebrities as Elvis Presley, Malcolm Forbes Sr., Jay Leno, Mickey Rourke, Tina Turner, Arnold Schwarzenegger and Elizabeth Taylor helped imbue the Harley brand with an aura of desirability and exclusivity.

Little wonder the company has historically generated 5% of its revenue just from the licensing of its logo alone.

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Investing in Cotton: The New "King" of the Commodities Sector

Gold is grabbing the headlines setting daily record highs. Silver is setting an-even-more-torrid pace. Wheat and coffee - American breakfast table staples - are surging due to bad weather around the world.

But there's another commodity that's up big: It's surged as much as 55% in the last 12 months to reach its highest price level in 15 years. And there's plenty more to come: Global demand far outstrips supply, creating an imbalance that won't be solved anytime soon.

I'm talking about cotton, the "new" king of the commodities sector.

"We have an extremely bullish situation," Mississippi State University Prof. Emeritus O.A. Cleveland said during a recent Ag Market Network conference call. Cleveland, a noted agricultural market economist, said prices could climb another 30% or more due to the ongoing supply/demand imbalances in play worldwide.

For three ways to profit from the continued rally in cotton, please read on...

Money Morning Mailbag: With Many Ways To Hold It, Investors Need To Get Their Hands on Silver

A couple weeks ago, Money Morning Guest Writer Jack Barnes examined the last major commodity to enjoy a true price breakout: silver.

Barnes detailed why silver is poised for a breakout, based on its current price surge underway in India, the price run up of gold - a leading indicator of silver prices - and the fact that the white metal has yet to set a new nominal record price in U.S. dollars.

Barnes outlined the actions investors should take to involve silver in their investment plans, offering three strategies: physical acquisition and accumulation, exchange-traded funds (ETFs) and stocks, and options on futures.

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Buy, Sell or Hold: Exelon Corp. (NYSE: EXC) Can Energize Your Portfolio with a High-Powered Dividend

With the yield on U.S. Treasury bonds sitting well below 3%, income investors have to get creative. Those seeking dividend-based cash flow must to be willing to look in less traditional places to find a safe yield.  And what could be less traditional than nuclear power?

After the Three Mile Island disaster of 1979, nuclear energy became the forgotten carbon-free source of electricity.  However, a small renaissance in nuclear power is happening as we speak, and Exelon Corp. (NYSE: EXC) gives us a great tool to capture the upside from this renaissance - with some solid income, to boot. 

Exelon is the largest operator of nuclear power plants in the United States, with 10 plants operating a total of 17 individual reactors.  It's the third-largest operator of nuclear plants in the world, and it has a massive barrier to entry around its niche market.

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Investing in Silver: Three Ways to Profit From the Projected Breakout

It's the last major commodity to enjoy a true price breakout, and it's already doing so in a foreign currency.

This commodity has yet to break out in U.S. dollar terms, although its breakout in India is a signal that it's time for U.S. investors to make their move.

I'm talking, of course, about silver.

Silver is trading at just under $20 an ounce right now. I think it could hit $50 an ounce by the 2012 presidential election, which would represent a 150% move from here.

Clearly, the "white metal" can be a major profit center for your portfolio during these uncertain times. Let's look at the strategy that I've put together for you to reap that gain.

For a look at the author's detailed silver strategy, please read on...

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Hungary's Spat with the IMF and EU Could Signal Another Crisis to Come

The biggest financial news story out of the Europe this summer is getting very little play in the U.S. mainstream press. However, it has the potential to torpedo the European Union (EU), and has disastrous implications for borrowing costs worldwide.

Basically, a miniature banking crisis is festering in Hungary. If it isn't contained, it could grow into a genuine crisis that infects the secondary lending markets around the world.

Hungary is supposed to have about $30 billion in domestic liquidity for exchange, the equivalent of about five months of capital in its national account.  But it won't be getting additional funds from the EU machine in Brussels, or the International Monetary Fund (IMF), anytime soon.

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