With inflation on the rise, global markets in turmoil, and the threat of war around the world, the potential for the dollar and other currencies to lose value or even collapse is becoming more real.
Seeing a potential disaster on the horizon, many smart investors concerned with the value of their assets are asking, “what should you own when the dollar collapses?” While it may seem counterintuitive, not all investments will go down in the event of a global economic downturn.
In this article, we’ll look at some investment options that will help hedge against inflation and protect your wealth in the event of a collapse.
What Does it Mean When the Dollar Collapses?
The dollar is the world’s reserve currency, meaning that most international transactions are conducted in dollars.
The US Dollar is a fiat currency, which means its value is based on faith in and the strength of the US economy. People have confidence that the dollar will retain its value, and so it does.
However, there are signs that the dollar’s days as the world’s reserve currency are numbered.
Growth Of The Yuan
For example, China has been working to increase the use of its own currency, the yuan, in international trade. As China becomes more powerful economically, it is likely that the yuan will eventually replace the dollar as the world’s reserve currency.
When that happens, the value of the dollar will decline sharply, and this is because there will be more yuan in circulation than there are dollars.
Domestic Monetary Issues
The dollar could also collapse due to irresponsible spending by the government, debt, and/or inflation.
The U.S. government is trillions of dollars in debt. This is money that the government has borrowed and has not yet paid back. The government borrows money by selling bonds. These are essentially IOUs that the government promises to pay back the bondholders with interest later.
The problem is that the government is borrowing more and more money, and it’s becoming increasingly difficult for them to make payments on all of this debt.
At some point, the bondholders will worry that the government will default on its debt. When this happens, they will demand higher interest rates to continue lending money to the government.
This will cause the cost of borrowing money to go up for the government, and it will also cause the dollar’s value to go down.
Inflation is another factor that could cause the dollar to collapse. Inflation occurs when more money is in circulation than goods and services available. The result is that each dollar becomes worth less.
The government can also cause inflation by printing too much money. Venezuela recently experienced significant hyperinflation after the government printed so much money that it caused inflation to reach over 1000%.
What Should You Own When the Dollar Collapses?
If and when the dollar loses its value, it’s important to have a diversified investment portfolio that will hedge against this. One of the best ways to do this is by investing in tangible assets with inherent value.
Gold Bullion
Gold bullion is any form of physical gold, including gold bars, gold coins, and ingots. One of the best things about physical gold is that it will always have value just about everywhere in the world. It’s worth noting that during periods of economic crisis, gold prices often skyrocket as investors flock to the safe-haven asset. So, if you’re looking to protect your wealth in the event of a dollar collapse, gold should be at the top of your list.
Silver Bullion
Like gold, silver is a valuable metal that can also be bought as silver bars, silver coins, and ingots. While it may not be as valuable as gold on an ounce-for-ounce basis, it’s still a valuable asset to own in a crisis. Silver is also more affordable than gold, making it a good option for those who want to diversify their assets but don’t have a large budget.
Precious Metals Mining Stocks
Investing in precious metals mining stocks is another option if you believe that the growth of a specific mine or the mining industry will outpace the price of gold. This will also expose you to the metal without having to take physical possession of it. However, it’s important to remember that mining stocks are more volatile than actual metals, so they may not be suitable for everyone.
Mutual Funds and ETFs That Invest in Gold and Silver
Another way to invest in precious metals without physical possession is to invest in mutual funds or exchange-traded funds (ETFs) holding those assets. This can be a good option if you’re looking for diversification but don’t want to deal with the hassle of buying and storing gold and silver yourself.
Foreign Currency
If you’re looking to hedge against a dollar collapse, investing in foreign currency like the Chinese Yuan is a good option. This will protect your wealth if the dollar loses value relative to other currencies. Just be sure to diversify your holdings to limit your exposure to any one currency.
Real Estate
While it’s not as liquid as some other assets, real estate can still be a valuable addition to your portfolio in a crisis. In fact, during economic turmoil, real estate often holds its value better than other asset classes. And, if you own rental property, you’ll benefit from generating income from your tenants.
Collectibles
Collectibles like art, coins, and stamps can also be a good option in a dollar collapse. While their value may be more subjective, they can still be sold for a profit if you need to raise cash in a hurry. And, if you’re a collector, you may be able to find some bargains during a crisis as other people are looking to sell their assets. It’s probably not wise to sink your entire portfolio into collectibles, but they make for an excellent diversification option.
Cryptocurrency
While cryptocurrency is not a physical asset like gold and silver, it is a secure digital asset you can take ownership of. Cryptocurrency operates independently of any government or monetary system, so when stocks are falling, this does not mean that crypto is falling with it which makes investing in crypto a possible hedge.
Bitcoin, the first and most well-known cryptocurrency, was created in 2009 in response to the financial crisis. While crypto prices are notoriously volatile, they could be a good option in a dollar collapse if you’re looking for an asset with the potential for high returns.
NFTs
NFTs, or non-fungible tokens, are a type of cryptocurrency that represents a unique asset. NFTs can be used to represent anything from digital art to real estate. While NFTs are still in their early stages, they could become a more popular option in a dollar collapse as people look for alternative assets to invest in.
Gold IRAs
A gold IRA is a type of retirement account that allows you to hold physical gold in your portfolio. This can be a good way to diversify your assets and protect your wealth in a crisis. However, it’s important to remember that you’ll still be subject to the same taxes and penalties as other retirement accounts.
Silver IRAs
A silver IRA works just like a gold IRA, but with silver instead of gold. This can be a good option if you’re looking for diversification and want to own a precious metal that’s more affordable than gold.
Precious Metals Futures
Precious metals futures are contracts that allow you to buy or sell a specified amount of metal at a set price at a future date. This can be a good way to speculate on the price of gold or silver without having to take physical possession. However, it’s important to remember that futures contracts are risky and can be complex, so they may not be suitable for everyone.
Open a Gold IRA with Noble Gold Investments
A gold and silver IRA could be an excellent option to secure your future if you’re looking for a way to protect your wealth against a dollar collapse or inflation. At Noble Gold Investments, we offer various options to purchase precious metals such as gold bars, gold coins, silver bullion, silver coins, and a wide range of other precious metals.
Getting started is easy – once you’ve created your account, we can help you roll over your current IRA or 401k into a gold IRA or even assist with direct funding. Contact us today to learn more about how we can help you grow your wealth, or click here to create your account now.
