What’s Wrong with the U.S. Dollar?

US dollar over market graph and world flags

Amid all the fanfare about record highs in the stock market, there’s been one fly buzzing loudly in the ointment: the U.S. dollar.

The U.S. dollar has plummeted 9% against rival currencies this year, showing the world’s confidence (or lack thereof) in our country’s ability to maintain forward economic progress. No surprise then that gold is up almost 8% in 2017, since gold and the U.S. dollar often move in inverse patterns.

Global investors are voting with their feet and walking over to rival countries to buy their currency instead of ours. Right or wrong, the effect of this perception is real and could have lasting consequences for your own financial legacy.

What seems to be the problem? There are three main issues to watch:

U. S. Dollar vs Yen

The Japanese yen just hit a new 2-month record high against the U.S. dollar. Why? The U.S.A. isn’t the only place where questions have been raised about the wisdom of central bank experiments like so-called “quantitative easing.”

According to Morgan Stanley, “the Bank of Japan may finally decide to begin reducing its aggressive easing policy,” and that means higher rates could be coming soon. Higher yields in Japan mean less Japanese investors interested in buying dollars and more buying yen.

U. S. Dollar vs Euro

The Euro has been riding a bullish wave in 2017 and has beat the U.S. dollar by about 13% so far this year. The Eurozone is finally catching up to America’s growth miracle. Because of this new strength, it is possible that central banks might shift their attention to the Euro more in 2018 when building currency reserves, at the expense of the dollar.

Market analysts will be keeping a close eye on Brexit negotiations as well as Italy’s potentially controversial general election in May, as political stability is the key to Euro strength in 2018.

Sudden Inflation Could Lead to Hasty Monetary Policy

Some market watchers believe that inflation could strike unexpectedly and rapidly in 2018, which could make for too-quick decisions by policy makers with unexpected long-term impacts and mistakes. This could “damage economic growth,” according to ABN Amro’s economist.

Also, keep an eye on the little known “repatriation clause” in President Trump’s proposed tax reform, which could loose a flood of dollars back to the U.S., driving up prices fast.

Over the long term, the trend for the U.S. dollar has been one of gradual erosion and loss of value over time.

This is why precious metals never seem to lose their allure to retirement investors, who need to preserve purchasing power over decades and can’t rely on cash and traditional stock and bond markets to do the job all by themselves.


In its outlook for 2018, Commerzbank predicts gold should rise for a third straight year, helped by low or negative interest rates and ongoing political uncertainty in the U.S. and Europe. The German bank is also bullish on silver, and it expects the precious metal to outperform because of strong industrial demand.

Commerzbank forecasts gold will average $1,325 an ounce in 2018 and silver average $17.25 in 2018.

Overseas, Commerzbank thinks political uncertainty will rise in the coming months. Hurdles include the difficult process of forming a government in Germany and probable parliamentary elections next spring in Italy. Moreover, the bank thinks the Catalonia separatist and Brexit issues will also remain key areas of concern for the financial markets. Other geopolitical hot spots the bank has identified include North Korea, the Middle East and Venezuela.

Closer to home, Commerzbank says there is no reason to assume that the second year of Trump’s presidency will run any more smoothly with respect to domestic or foreign policy. The bank cites ongoing tensions between the West and Russia over Russian meddling in the U.S. elections as particularly damaging to legislative action.

Commerzbank views silver as a potential winner, especially if you agree with some analysts that say that silver has catch-up potential versus gold. Positive economic trends mean that industrial demand for silver is likely to become even more explosive. Did you know that industrial uses like phones and other electronics accounts for more than half of total silver demand?

Buying gold and silver and getting started with a Gold IRA are two helpful ways to take advantage of what could be coming in 2018 and later.


Last week, bitcoin exchanges were hacked and looted for $70 million worth of bitcoin, and the market barely reacted!

Whether you think bitcoin is something special or not, the recent trading patterns for bitcoin show every indication of a severe bubble formation and tulip bulb mentality run amok. Ask your cab driver or waiter if they’ve considered bitcoin, and you’ll likely get an earful about the “easy money” to be made there.

James Howard Kunstler believes that central bank interventions are the only factors keeping the capital markets racing up to record heights, especially since he thinks the underlying economies of most Western nations remain dangerously weak. He thinks bitcoin is not only a mania, but also a warning that the financial circulatory system of the global economy is in some kind of distress.


Despite the allure of what can seem temporarily like “easy money” in the latest market fad, gold has significant advantages over bitcoin such as longevity, liquidity, physical asset safety and commercial utility.

Bitcoin’s unprecedented gains are actually signs that speculation and greed have overtaken reason and common sense in the financial markets and when bitcoin comes crashing back down the earth, the resulting carnage will not be pretty.

In fact, the recent rise in bitcoin has reaffirmed bullion’s inherent advantages as a physical store of value with a proven history as a diversification tool and safe-haven asset. Bitcoin exists only on servers and computers, whereas gold is tangible and real with thousands of years behind it. Some experts think the rise of Bitcoin is a sign of systemic weakness in the markets and a full-blown financial crisis is inevitable.

Yale economist Stephen Roach has issued a warning to investors hoping to join the bitcoin party. He says bitcoin is a dangerous speculative bubble by any shadow or stretch of the imagination.

Current market pressures have created opportunities for retirement investors who understand the growing risks to their future and financial legacy. Take the first step today!

Get Your Free 2024 Guide
Most Recent News