Disclaimer: I am not a financial planner nor an investment expert and I am not qualified to give investment advice. I’m just a guy who has never lost money in an investment in my entire life, and makes economic observations as a laymen. Please seek a finance professional for advice on how to invest your money. Don’t take financial advice from business consultants or dating experts.
The US Dollar is in for a very interesting future over the next several years. It’s also unlike any other currency in the world, making things a little complicated.
The US Dollar is an extremely flawed currency. There are many reasons for this, but here are a few:
1. The Federal Reserve over-printing the Dollar in order to prop up big government and temporarily stave off a huge recession (which is guaranteed to come anyway). As you can see from the above chart, the US Dollar has lost 95% of its purchasing power since 1913 when the Federal Reserve was created. Great. Thanks, jerks.
2. Other major nations getting upset that the US Dollar is the only world-recognized reserve currency, and they’re attempting to replace it, which eventually they will. The Chinese, Russians, Brazilians, and several other nations have made it their goal to go into direct competition with the US Dollar on the world stage. (Guess which one I’m betting will eventually pull it off? China of course.)
3. Competition for the dollar in the form of cryptocurrencies like bitcoin and Ethereum.
4. More and more people and nations purchasing mass amounts of gold as a hedge against the Dollar (and for other reasons).
On the flip side, the US Dollar still is the world’s reserve currency, more or less forcing you to use US Dollars if you make major transactions on the world market, including oil purchases from the Middle East which (so far) require dollars.
More importantly, while the US Dollar is heavily flawed, most people in the world are idiots and don’t know this. Historically the US Dollar has been a safe haven in times of trouble, so in the near future, if/when the world experiences major economic problems (and it will), hordes of people all over the planet will flock to the US Dollar. They will think the Dollar is safe. It won’t be, but that’s what they’ll think.
This will actually increase and strengthen the value of the Dollar. At least for a while.
That’s why, strangely, a good investment right now is the US Dollar even though it sucks. At some point soon, the world will be having major economic problems, people will buy dollars, and the price of the US Dollar will rise sharply, possibly even becoming a bubble.
Then, likely, like all bubbles, the US Dollar will crash, and investments like gold will soar. This could possibly cause Scenario 3 I’ve discussed before, a currency crisis.
When problems occur and the Dollar rallies, gold prices will likely fall. Gold usually moves in inverse proportion to the US Dollar (though not always). People who hate gold will say, “Ha! See? Gold sucks! Told ya!”
They will be temporarily correct, until the Dollar crashes. Then gold will rise. A lot.
I can’t advise you, but I can tell you what I plan on doing:
1. Currently, invest in US Dollars via non-leveraged ETFs. (But I’m not selling the gold I already own.)
2. When the Dollar rises in price and gold collapses, sell my dollars, take my profit, and buy lots of gold. I may not be able to time things as close as I would like, but likely it’ll be good enough to make a nice profit.
3. When the Dollar collapses and gold rises, make a huge profit again, and throw a big party in Vegas with all the money I’ve made. (Just kidding on that last part. The money I make will stay where it belongs: in my long-term investments.)
When will these things happen? As usual, I have no idea, and anyone who tells you they know when these things will occur are full of shit. As has always been the case with me and investments, I always accurately predict what is going to happen, but I never know when it’s going to happen, and whenever I guess I’m always wrong. So I stopped guessing a long time ago.
Will I be right? Will this happen as I’m describing? We’ll see, but I think so.