World Losing Respect for Dollar – Can Gold Help You?

It’s coming. The fastest growing economies are just tired of our BS. As a nation we use our military and our dollars to try to influence other countries. Contrary to what many people think, these folks don’t like that. Which is why they’re doing things like this:

India Will Transact with Iran in Rupees

What does this mean? It means India doesn’t feeling like playing the US’ games with Iran. If the US bans Iranian oil exports from being paid with dollars, India will not just directly pay in their own currency. Commodities are often settled in dollars but now that’s changing. India is the latest in a string of countries bypassing use of the US dollar for direct trade in their own currencies.

What This Means to You – Consider Gold

Gold US Eagle

Understand that this whole game where the treasury issues trillions in debt and the Federal Reserve buys the debt in the open market (basically one US government (sort of) entity buying from another), is not going to last forever. Eventually countries will bypass the dollar and their demand for US bonds (which they buy with their dollars) will fall precipitously. If this does indeed happen more often, the Fed may increase their purchases of Treasury bonds which means bad news for cost of living.

If the US dollar drops due to decreased demand, life will get more expensive for all of us. Therefore, owning some precious metals may make some good sense here.  Precious metals, particularly gold, might offset some of this risk. Of course there are some who fear the opposite might happen – the debt implodes bringing deflation. Even if that happens, I don’t think the dollar is a desirable currency and since we buy so many goods from other countries, life could indeed get expensive.

I recommend people consider owning gold in the following ways:

  • Physical metal – US Gold Eagles are the standard but Canadian “Maple Leafs” and other coins work fine too though Eagles enjoy some benefits (ask your coin dealer). You can also own physical gold in your IRA (call for questions)
  • Gold ETF’s – not bad, good way to trade gold, but since it’s not in your possession, part of the insurance benefit is lost
  • Gold mining stocks – a way to play rising gold if you don’t think Armageddon is coming (just higher inflation). As these stocks should be levered to gold.
  • Gold exploration companies – long shot investments (bets?) on small companies who’ve yet to discover fully or prove the gold they’ve found. These are much riskier but could multiply many fold.
  • Silver – if you can’t afford to buy ounces of gold, consider accumulating silver which may offer some of the same benefits as gold but is much more volatile

If you are considering adding precious metals exposure to your portfolio (ie buying gold or silver) but are not sure which is the best way to do it for you, give us a call at 781.393.0021 or drop a note in our contact form. We can discuss over the phone, help you get more information, and maybe help you make some smart choices with your money.

Thanks for reading!