As the dollar continues it’s downward slide some are wondering if this is a new era of weakness or the new norm for the US currency. A few weeks back the dollar fell to its lowest level since May 2018 as investors grew increasingly bearish towards the currency. The dollar has had eight consecutive weeks of decline, the worst weekly losing streak in a decade.
The greenback is sliding not only against benchmarks such as gold but also against other key currencies, reaching a two-year low against a basket of other currencies. The tumbling dollar fell the most against the Euro and Japanese YEN, driving the EUR/USD to it’s strongest level in over 2 years.
The dollar is in trouble and the ominous signs are there. Unfortunately, things could get worse before it gets better, especially in an environment of escalating political and health risks in the U.S.
Why is the Dollar sliding?
With the COVID-19 crisis continuing to cripple the economy and as negotiations break-down over a new round of fiscal stimulus to aid the economy, the US greenback stands to worsen. There are growing concerns that lasting damage to the US economy could slow economic growth for years to come.
Worsening relations between Washington and Beijing, uncertainty over the upcoming US elections, US Political disarray, partisan bickering over mail-in voting, concerns over skyrocketing US debt and budget deficit, recession fears, etc. are contributing to the markets being less comfortable with holding the greenback. These concerns will undoubtedly continue to take a toll on the US Currency.
Investors are growing increasingly anxious and many are turning to gold to hedge and protect their assets against the dollars’ fragility. As more investors, institutions, countries lose confidence in the reserve currency, we could see a continued rise in the demand for Gold.
Some argue that the greenbacks’ recent fall from grace is temporary, and that as the US economy rebounds and the COVID pandemic comes under control, the markets will improve, supporting a dollar rebound. However, the uncertainty doesn’t seem to be subsiding. Under the current conditions, rising COVID cases, high inflation concerns, political and economic uncertainty, etc. the stage is set for the dollar possibly continuing its downward spiral.
A dollar crash would reap chaos on an already struggling global economy and could drastically affect ones savings and retirement income. Assets backed mainly by the greenback would become more unpredictable, risky, and volatile and the purchasing power of investments could significantly decrease.
Gold is traditionally a great hedge against inflation and a falling dollar and with the current political and economic uncertainty, now could be a good time to switch some of your savings or USD holdings into precious metals like gold.
Learn how to diversify and protect your retirement income from a declining dollar with safe-haven investments like gold by calling American Hartford Gold at 800-462-0071.