USD: Is the Reign Over?

The dollar has hit another decline as interest rates were cut to new lows. As interest rates decrease, so does the value of the dollar as an accelerated money supply makes each bill worth a little bit less. Investors then run to other currencies with higher interest. However, a cheaper USD would encourage other countries to buy our cheaper goods. The question then becomes, what should we invest in if not the USD?

There are two main things one could invest in to hedge against the dollar: other currencies and precious metals. When the dollar declines, other currencies rise. The euro, yen, and pound are all formidable options. It is even being said that the euro will eventually replace the dollar as the world's reserve currency. With that said, the euro still has a way to go as the dollar is still the world's leading reserve currency by an overwhelming margin. Precious metals, mainly gold, are a common source of hedging. Gold is deemed a solid asset and is bought in tough economic times to hedge against the decline in other assets. Gold is thought to be one thing that has solid value, thus creating an illusion of stability. In a market of record volatility, stability is something that investors look to flock to.

In conclusion, look toward currencies and precious metals when betting and/or hedging against the USD. I think the euro and gold are the best in these categories and will be for some time. Just know whatever conclusions your research discovers, investing is for the long-term. Be patient and keep looking for that illusion of stability.