“We’ve done so much damage in monetary policy.”– Precious Metals Advisor Damian White
Investors are scratching their heads as the USD creeps higher at the same time various asset classes crumble. This counter-intuitive move doesn’t make any sense at first glance, but a quick peek behind the curtain reveals the true culprit.
Watch the video to hear what Precious Metals Advisors Todd Graf & Damian White are saying about the strength of the US dollar, why it’s not going to last long, and where investors should be putting their money right now.
Fiat is the Root Cause of Asset Collapses
Economic turbulence is tanking nearly every asset class:
- The NASDAQ is down 30% and the S&P is down 21%.
- The housing market saw a 10% drop last month.
- Cryptocurrencies sit 70% below recent highs.
- Gold prices have slightly dipped about 3.5% YTD.
Investors are expecting these precipitous drops to coincide with the devaluing of the dollar. After all, currencies are the real trigger for these collapsing asset classes. However, that’s not what we’re seeing right now. Just this week, the value of the US dollar notched 20-year highs, causing even more confusion in the markets.
The Nicest House in a Bad Neighborhood
The relative strength of the USD comes as a surprise amidst a flailing economy. The Fed’s reckless spending to the tune of nearly $7 trillion in 2021 alone suggests a weaker dollar. This is a time when perspective becomes critical. Currencies can’t be observed in a vacuum as their value is always determined in relation to other assets, such as other global currencies.
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In the case of the USD, its value is temporarily being buoyed by the collapse of other currencies around the world. For instance, the Euro is plummeting toward a $1 parity with the greenback for the first time in years as the currency is beaten down by an ongoing war and energy crisis. When compared to other currencies the USD is strong, but the economic outlook is still dismal.
The Dollar’s Short-Lived Strength
Experts anticipate the USD’s most recent upwards momentum to gradually taper off into a downtrend due to the dismal economic backdrop. The Fed’s destructive monetary policies and slow reactions have put the US economy in a lose-lose situation where virtually all decisions have a negative impact on markets.
All fiat-linked assets are down considerably, and it’s only a matter of time before the greenback follows suit. This lag is causing a lot of confusion among investors who understandably expect the dollar to fall with assets. In reality, this differential provides a great opportunity for investors to move their wealth into more stable assets for the near future to hedge against inflation.
Gold’s reaction isn’t always immediate.
The USD’s recent spike in value shouldn’t be taken as a sign that the economy is getting back on track. Experts still anticipate the greenback to perform poorly in the near future. The Fed’s poor policies have already sealed the fate of the USD. Despite a minor dip, gold prices are expected to rise as fiat-backed asset classes continue to fall.
Smart investors are taking advantage of the current strength of the dollar to increase their supplies of gold and other precious metals as the threat of a recession looms. Now is the perfect opportunity to get a bigger bang for your buck. Request your FREE COPY of our popular Precious Metals Investment Guide to learn how to buy gold and silver while avoiding common rookie mistakes.