Is the Dollar a Sinking Ship?

The shutdown of the U.S. Government over the weekend is likely to dominate the headlines this week. Although it seemed late Friday that a deal could potentially be reached in time, Republicans and Democrats appear to be far from an agreement at this point. Stock investors didn’t seem to be fazed by the potential shutdown on Friday, but that could change in a hurry if both sides of the aisle are not able to make progress quickly.

Although the shutdown is not likely to have any major economic consequences, the longer it goes on the more serious damage it could potentially do to the economy.

The dollar saw some moderate selling pressure last week, and that selling could intensify if a deal on funding is not able to be reached by lawmakers. In fact, the dollar index has been trending lower for months now, and it could potentially be headed for fresh lows. Currently, the greenback is near a three year low, but additional chart damage and a lengthy shutdown could send the currency sharply lower from recent levels.

The dollar index has been losing ground despite economic strength in the U.S. and the notion of higher rates. The currency is likely declining currently for four major reasons:

  • Federal Deficits
  • Ongoing domestic political uncertainty
  • Europe and other regions playing “catch up”
  • Status

The recent passage of major tax cuts will cause ballooning deficits. Although these cuts may have a stimulating effect on the economy, it is unclear how the cuts will be paid for.

Whether you are a Republican or a Democrat, the seeming inability of these two parties to work together for the benefit of the nation is a major cause of concern.

Although the U.S. has already begun the process of normalizing monetary policy, other nations such as Europe and Japan seem headed in a similar direction. In fact, some areas could even take more aggressive action, boosting their currencies against the dollar in the process.

The dollar may also see ongoing pressure as its status as the globe’s leading reserve currency is challenged.

As the dollar declines, there is a corresponding decline in your purchasing power and real returns.

Because the dollar appears to have a one-way ticket lower, now may be the ideal time to diversify your portfolio with assets that may potentially offset a weaker currency. Now may be the ideal time to consider physical gold.

Gold has been considered a reliable store of wealth and value for centuries, and may potentially hold or increase in value as paper currencies such as the dollar decline in value. Adding this key asset class to your holdings has never been easier than it is today.

Speak with an Advantage Gold account executive today about the possible effects of a weakening dollar and the potential benefits that gold may provide. Our account executives are here to answer any questions you may have, and can even show you how to add this asset class to your portfolio using your IRA account.

Don’t wait for further dollar declines to take a bite out of your purchasing power. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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