The Fate of the Dollar
In uncertain times, the dollar index chart goes up. This is because the dollar has been a safe haven since the end of World War II. Businesspeople in Europe, Asia, the Middle East, and Africa, will look past their own currencies and dart for the world’s reserve; the greenback!
If that ever changes, investors are in big trouble. The price of US debt would increase dramatically, and inflation would go through the roof. No exaggeration, there’d probably be a massive crash as all-American stocks would get undermined, and the axis of economic power in the world would change, perhaps to China, Russia, or those in possession of gold.
If the baton ever does change hands, it won’t be a peaceful transition. In essence, every currency is competing, and some world powers will stop at nothing to debase the dollar for a political edge. The Chinese, for example, have stepped up trade in euros like never before.
The long-term threat can be mitigated, and calls for an internationally diversified portfolio, but the US dollar is now falling at quite a pace, which has some investors worried. We shouldn’t draw conclusions until after the presidential election is out the way, but if trust is lost in the greenback, no one will avoid losses. In your lifetime?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
