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The Decline of the U.S. Dollar

Observant1
edited February 22 in Other Investing
"The dollar has always been mightier than the size of the U.S. economy suggests it should be.
Its share of the global market in currency reserves and international debt issuance is in the range
of 60% to 80%, or two to three times the U.S. share of the global economy.
For years, critics have argued that the dollar’s place of primacy would erode, to no avail.
There was no alternative."

"That began to change more than a decade ago as China started to wean itself off the dollar,
diversifying reserves into gold while pushing for wider use of its own currency.
But the true impetus came with Russia’s invasion of Ukraine, and the sanctions and freezing of assets
that followed. The weaponization of the dollar pushed central banks to pare back some of their holdings for gold."

https://www.msn.com/en-us/money/markets/the-reign-of-the-dollar-is-coming-to-an-end-what-investors-can-do-about-it/ar-AA1WDUu6


Note: Charts in the original Barron's article are excluded on MSN.

Comments

  • Mitchelg
    I dealt with foreign currencies for 35 years in my past life. One thing I learned is predictions are worthless in the currency arena. My plan is to accumulate emerging markets equity and bond assets plus solid international quality ETF's. So far the plan is working. I am hoping for a sell off to continue buying these.
  • JD_co
    Bold added:
    Continued reallocation could provide a tailwind for gold. If investors nudged their allocations to just 3.5% from 3%, J.P. Morgan’s Chang says that could translate to $6,000 gold, while a move to 4.6% in coming years could push the price as high as $8,500. Ed Yardeni, of Yardeni Research, told clients in a recent note that $10,000 gold by the end of 2029 is plausible.

    Gold’s rise is the clearest sign that investors are rethinking assumptions about the dollar.
  • a2z
    edited February 22
    am skeptical that there will significant spikes in the dollar AND one can then each time the deployment to buy foreign equities\bonds. it seems more likely there will be a slow usd grind down and the most probable success will be to regularly scale into foreign despite increasing average paid.

    the 'black swan' event is whether americans can restore institutions to reverse damage already incurred that will last decades. foreign nations realize the time&effort to build requires far more skill than populism takes to break, and will make better use of their efforts than dealing with the many americans responsible for the fiasco.
    as mentioned in earlier threads, the frdm index etf by perth tolle is a good way to track stable and rising economic democracies.
  • ronorono
    Howdy folks,

    The de-dollarization trade. Not sure that it's not the de-fiat currency trade, but golly, you have $38 trillion in debt on a $30 trillion economy with an annual interest bill of over $1 trillion. Even Powell said that 'it's unsustainable'. They have two choices, Default and broken promises or print a lot more money. Has to be the latter. I've been rotating out of US dollars since the election. Actually, it goes back to Biden and freezing Russian assets after they invade Ukraine. The rest of the world gulped and started converting. It's been slow and steady to date to not spook the markets, but it's there. Hell, they're buying anything but US dollars. That's one of the demands for gold and silver - the Sovereigns. I've tried to move my overseas bond holdings into funds that are currency hedged. Price is pretty good there. Bought some BKF to play the BRICs. I do NOT trust the fiat currencies. None of them.

    and so it goes,

    peace,

    rono
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