Is Further Downside in the Dollar on the Way?

It’s no secret that the dollar has been under pressure in recent months. The idea of rising deficits, ongoing relatively low interest rates and more aggressive monetary policies in other parts of the world have all played a role in the greenback’s slide.

The dollar recently tried to rally as Fed Chairman Jerome Powell has not eased fears of three rate hikes this year and possibly a fourth. Higher rates could boost the dollar, as it could mean potentially higher returns for those holding dollars.

Even with the possibility of three or four rate hikes this year, however, the dollar remains on very thin ice. Recent tax legislation, along with potential tariffs on aluminum and steel imports could keep pressure on the dollar and keep any rallies short and unconvincing.

If you really think about it, there simply is no reason for the dollar to move sharply higher from current levels. Ongoing and increasing deficits are a big part of the problem. As debt continues to expand, there could come a day when the government simply has no choice but to debase the currency in order to keep debt payments more manageable.

Deficits are just one part of a significant and complex problem, however. There is also the issue of the dollar’s status. For decades, the dollar has been the preferred reserve currency of the world. That status, however, could be called into question as other currencies gain momentum. It’s no secret that some nations have already set up swap lines in order to transact outside of dollars. This trend could continue. The Chinese Yuan, for example, could eventually compete with the dollar for preferred status around the globe.

If other currencies do gain favor, a lot of dollars from overseas could find their way back to the U.S., increasing supply and lowering value even further.

The bottom line is this: It is absolutely imperative to hold assets that can provide a hedge against a weaker dollar. Without question, physical gold would be at the top of the list.

Gold has been considered a reliable store of wealth and value for centuries, and as a dollar-denominated commodity, it has a tendency to move in the opposite direction of the dollar. That being said, a weaker dollar could potentially mean stronger gold. With little, if any, reason for the dollar to mount a significant and sustainable rally higher, now may be the ideal time to take steps to potentially protect and preserve your wealth and purchasing power.

Adding physical gold to your portfolio has never been easier, and it can potentially provide a variety of benefits including acting as a hedge against dollar weakness, a hedge against inflation or deflation, added portfolio diversification and the potential for significant price appreciation.

Speak with an Advantage Gold account executive about these and other possible benefits of gold ownership. Our account professionals are here to answer any questions you may have, and can even show you how to incorporate gold in an IRA account.

Don’t wait for a weaker dollar to erode your purchasing power or net returns before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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