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Don’t look now, but something in your wallet or purse is “shrinking” by the day.
I’m talking about your U.S. dollars. While they may not be getting physically smaller, they are steadily losing purchasing power – and the process is accelerating in 2021.
That, in turn, presents both opportunities and risks to you as an investor. I want to make sure you capitalize on more of the former and dodge more of the latter.
Start with this chart of U.S. Dollar Index futures going back to 2009.
The Dollar Index (DXY) tracks the performance of the U.S. dollar against a basket of six foreign currencies. The euro is the largest component, while the remainder of the basket consists of the British pound, the Canadian dollar, the Japanese yen, the Swedish krona and the Swiss franc.
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You can see that the dollar rallied sharply from 2014 through 2017 then made a secondary peak during the worst of the COVID-19 panic. But it’s been mostly downhill since then.
If we break through the 88.50 level, I’d view it as a massive technical failure on the chart, one that would foretell even more losses over time.
The catalyst here is pretty obvious: We’ve embarked on the biggest money printing, borrowing and spending binge in U.S. history. That’s fueled an epic money flood into financial and real assets, creating the prosper now, pay later market environment I talked about recently.
But the U.S. dollar has been one of the primary victims. As the dollar falls and inflation rises, the intrinsic value of your money gradually erodes.
So, how can you fight back? Make sure you don’t get your pockets picked a little more each day? Well, start with the “safe money” strategies I’ve been advocating.
Think about gold, silver and mining shares. They tend to behave as “contra-dollar” assets. In other words, they tend to rise when the U.S. dollar falls. It’s no surprise that gold is closing in on $1,900 an ounce again, while silver is flirting with $28.
High-quality foreign stocks with generous dividends and solid Weiss Ratings can be another profit source. If you’re a U.S.-based investor who buys shares of foreign companies denominated in foreign currencies, and those foreign currencies rise against the greenback, you get a currency performance “kicker.”
That means you can profit from both foreign stock appreciation and foreign currency appreciation. Many exchange-traded funds (ETFs) and mutual funds that invest in foreign shares on your behalf also let you capitalize on those forces.
Naturally, my best ideas for profiting from the dollar decline can be found in the Safe Money Report.
I’m also going to share some ways to capitalize in a few weeks at the MoneyShow Orlando. This is my first in-person conference appearance since COVID-19 struck, and I’m excited to get back to speaking with investors like you face-to-face.
The event runs from June 10 through June 12 at the Omni Orlando Resort at ChampionsGate. You can catch my specific presentation “Prosper Now, Pay Later: Windfall Strategies for a World Gone Mad” on Friday, June 11, from 2:30 p.m. to 3:15 p.m. EDT.
For complete details and to register to attend, click here. I hope to see you there.
Until next time,
Mike Larson
