Gold is seeing prices pop on Wednesday, as the dollar index declines to a 4.5 month low. The dollar index appears to have put in a long-term top at this point, and looks both fundamentally and technically weak. This weakness could potentially send the greenback even lower-dramatically lower-from current levels.
The buck is seeing selling pressure today as Treasury Secretary Steve Mnuchin talks about how a weaker dollar is beneficial for the U.S. economy. His comments were made in Davos, Switzerland, at the World Economic Forum.
The notion of a weaker dollar boosting exports and adding fuel to the economy is nothing new. A weaker currency can also make debt more manageable (and there is certainly enough of that), but a weaker dollar also comes with a cost: A decline in your purchasing power.
As the currency weakens, the price for everyday goods and services gets relatively more expensive. Everything from gasoline to food to clothing costs more, as your dollars simply do not stretch as far. This effect can be quite profound in other areas as well. Things like imported products, medications and even travel can be significantly more expensive.
As dollar weakness escalates and disposable incomes decline, there can even be more severe effects including credit defaults and foreclosures. It is a very serious economic issue for consumers, and one that should not be taken lightly.
The bottom line? A weaker dollar eats away at purchasing power and real returns. So the question then becomes: How can you insulate yourself from a declining dollar?
Physical gold may be the best answer. Gold has been considered a reliable store of wealth and value for thousands of years, and it can potentially provide an important hedge against currency weakness. Gold and the dollar tend to have a strong correlation, as it is a dollar-denominated commodity: Often times, as the dollar goes up gold goes down. As the dollar declines, gold goes up. This asset class may potentially hold its value-or even increase sharply in value-as paper currencies decline.
Not only that, but gold can provide a whole variety of additional benefits as well including the potential for significant price appreciation, a lack of counterparty risk and a means of portfolio diversification.
Given the potential for the dollar, and your purchasing power, to shrink even further, now may be the ideal time to add an allocation in this key asset class. Doing so has never been easier than it is today.
Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our account executives are here to answer any questions you may have, and can even show you how to add physical gold to your portfolio using your IRA account.
Don’t wait for the next leg lower in the dollar to further erode your purchasing power or take a big bite out of your net returns. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to learn more.Tags: advantage gold, currency, davos, gold, mnuchin, trade, weaker dollar