Don’t Let Dollar Strength Fool You

Some commodities have come under pressure in recent days as the dollar index has been rallying from recent lows. As a dollar-denominated commodity, gold has been seeing some selling pressure as the greenback has moved higher.

Don’t be fooled.

The dollar is still very much in a long-term downtrend. In fact, the value of the currency has been declining for decades, and further declines will be seen in the decades ahead. Throughout history, fiat currencies have shown a tendency to fail, and with good reason. Here are three reasons why the dollar is likely to continue to depreciate and why gold is the only true form of money.

  1. No Backing: The dollar is essentially a piece of paper that is exchanged as a store of value. The problem with it, however, is that there is nothing backing it up as such. A dollar could be more appropriately viewed as an IOU-in which case the “value” of each note is guaranteed by the credit of the U.S. To put this into perspective, imagine for a moment if the U.S. went bankrupt. What would a dollar be worth then?
  2. Supply: There are a whole lot of paper notes floating around out there. Not only is there a massive supply of dollars, but the money supply can be expanded or contracted by central banks. Need more money to fight an economic slump? Simply print more. The problem with this, however, is that the laws of supply and demand still ring true. With demand staying constant, or even declining, higher supply should cause value to decline.
  3. Reserve Status: The dollar has been the favored global reserve currency for decades now. Global banks have kept large reserves in U.S. Dollars, as it has always been considered reliable and “safe.” Over the years, however, there has been more and more movement away from the U.S. Dollar. Counties that want to transact outside of dollars have already set up swap lines to do so. New emerging market currencies, such as the Chinese Yuan, could pose a significant challenge for the dollar in maintaining its status as the currency of choice. Should such a shift take place, foreign dollars could come back to U.S. in massive quantities, flooding supplies. See #2.

Although the currency is not likely to head straight down, it is very likely to continue the downtrend already in place. In fact, the country may need to keep a weak dollar policy in place to manage its debt obligations, which continue to hit record highs.

Now is the time to diversify your portfolio with the only real form of money left: gold. And we are not talking “paper gold” products like stocks, ETFs or certificates. No, the only asset that can act as a store of value anywhere on the globe while carrying zero counterparty risk is physical gold. The kind you can touch and feel.

Adding it to your portfolio has never been easier. Speak with an Advantage Gold account executive today about the potential benefits of gold ownership, and how you can even use an IRA account to conveniently build an allocation in this key asset class.

Don’t wait for further dollar downside to erode the value of your portfolio further. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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