How To Prepare Your Retirement Portfolio For A Future Dollar Collapse

HardStacks / Retirement  / How To Prepare Your Retirement Portfolio For A Future Dollar Collapse

For many years the US dollar has been one of the strongest currencies in the world as countries, financial institutions and private investors alike have continually seen it as a solid reserve currency. The American government has played a big role in promoting the surge of the dollar’s price, since its strong currency policy has kept inflation in check, attracted foreign investments and secured the dollar as a dominant role in the global market.

However, as the saying goes, what goes up must go down and the dollar is no exception. Recent developments, such as President Trump’s hints about ending a strong dollar policy, suggest that the currency is too strong for its own sake, and is ready to collapse at any moment.

The Dollar’s Collapse is Imminent

Financial experts have pointed out to the similarities between the dollar’s overvaluation of today and the one that caused the dollar’s crash in the early 1980s. They see it as a sign that the currency is on the verge of collapsing again.

Since the 1990s, the dollar’s price has kept increasing at a steady pace, even to the point of benefiting from the Great Recession of 2008. But, this just means that it is getting near the end of its growing period, and its price will either collapse or slowly correct itself in the coming years.

Some speculate that President Trump is interested in devaluing the dollar to a more manageable price. This would make sense giving his protectionist economic policies which look to rebuild the manufacturing industry in America.

A weaker dollar would make it easier for American exports to compete with China on an equal basis. However, the experts believe that the President’s measures to lower the dollar will only work in the short term and that the crash could happen in a year or even less.

The dollar’s crash would create global economic turmoil, as investors desperately try to exchange their dollar assets for other currencies, all in an effort to lose as little as possible. In addition, international trade would also suffer considerably, since much of it is done with the US dollar as the reserve currency.

Trade Weighted US Dollar IndexHow to Prepare Your Portfolio for the Crash

The key to surviving the collapse is having a well diversified portfolio with liquid assets that you can easily use and trade. One of the best ways of preparing yourself for a crash is to invest in gold. Gold has always been considered an excellent crisis currency, meaning that its value increases dramatically during times of economic instability.

For example, the chart above shows that when the dollar crashed in the 1980’s and in the early 2000s, the price of gold rose from $100 per ounce to as much as $1,900. This type of price increase is possible because gold is independent of the price of any currency.

Owning gold will protect your wealth and purchasing power as you will have a precious commodity that will keep rising in value as the dollar drops. This means that even if you can’t sell your dollar-based investments in times of crisis for a good price, you will be able to hedge your losses with gold assets that increase in value.

The dollar’s collapse will have tremendous repercussions in the world’s economy. Almost every investor who holds dollar-based assets will rush to exchange those for other types of currencies at very unfavorable exchange rates. Whether the dollar’s price crashes or slowly corrects itself, buying gold is a necessary safety measure that will protect you and your investments in the long run.

David Warren

David Warren is the senior writer and lead researcher at HardStacks. He has been a financial engineer for over 30 years and has been investing in alternative assets since the Great Recession of 2008. He has a true passion for learning about economic cycles and educating others on how to protect and grow their wealth by investing in precious metals, real estate and cryptocurrencies.
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