“Paper money eventually returns to its intrinsic value: zero.” — Voltaire
How can you take advantage of a strong dollar?
There is a short window to do this.
The dollar is super strong right now, even though we’re creating all this currency.
Today I’ll talk about a few things to keep an eye on.
1. Why is the Dollar Getting Stronger?
Before we jump into the steps you can take, let’s talk a little bit about why the dollar became so strong.
There are a few reasons.
The first is the U.S. raising the federal interest rate.
When they do this, it hurts other economies around the world.
This is especially felt in the supply and demand of goods.
The second reason the dollar has become strong is money printing.
(We did an entire video with Jay Powell about money printing that you can watch here!)
It’s bizarre that even as more money has been printed in the US, demand for the dollar has actually gone up!
This is the complete opposite of what we normally we say about money printing and inflation.
A strong dollar both helps and hurts our economy.
On the positive side, you can buy imported goods much cheaper.
It may not feel like it because of inflation, but we are actually paying less for amazon items and other imported goods than other countries.
On the more negative side, our US exported goods are now more costly.
This means other countries are paying more for our goods.
That isn’t so great for our economy.
Don’t let those negatives fool you though!
You can take advantage of a strong dollar.
Let’s talk about how:
2. Ways to Take Advantage
There are many ways to take advantage of a strong dollar.
Here are a few to consider:
Investing in Precious Metals
One thing I love is precious metals.
My friends who just invest in real estate don’t get it.
A lot of people don’t understand that there’s a 5,000-year history of metals being currency.
Up until 1933, a $20 bill said “payable to the bearer on demand in gold.”
You could take the bill and exchange it for an ounce of gold.
Gold was acutally money.
The paper currency was simply a claim check on the money.
Monetary bills themselves have no intrinsic value.
We’re seeing them become worth less and less.
What does $20 buy?
In the past, you could buy a pretty good meal for a family of four with that money.
Now it only covers a meal for one.
That’s because they’re creating more paper money.
The more paper money there is, the less it’s worth.
With metals, it’s different.
They are a store of value.
They’re an inflation hedge.
You can’t create more.
There’s a limited number.
My friend Russell Gray calls this the precious equity strategy:
You buy gold and silver coins (or bars).
Ship them to a third-party vault.
There’s a place outside of Las Vegas called TDS Vaults that will store them for a small fee.
After that, you can borrow against the value of your gold or silver at 75% loan of value.
If you have $100,000 worth of metals, you can borrow $75,000 in dollars.
You’re paying around 6.5%.
It’s like a Home Equity Line of Credit (HELOC).
You only use the amount for the days it’s out, and then you put it back in.
The advantage here is that it’s inflation hedge that you can borrow against.
It’s basically a store of value in a better way than dollars.
Where do you put resources so they don’t disappear?
Some people have said that metals are down in the last few years.
This is technically true.
Today an ounce of gold is worth around $1,644.
A couple of years ago the value was $2,000.
We’re now about 15% from the recent peak price of gold.
If you look at euros, gold is up 10%.
It’s like this in other currencies as well.
Just because the dollar became 25% stronger, that doesn’t mean gold has come down on an international scale.
It simply means the dollar has gotten stronger.
In the long run, buying gold and silver is a great investment!
The next thing to pay attention to is travel.
If you travel internationally from America, the prices have gone way down.
I bought a direct flight from LA to Barcelona for $500.
The currency exchange rates are also much more favorable to the U.S. dollar.
It’s a great time to book travel.
It is a great time to be a consumer.
If you don’t have your food pantry stocked, do it now!
Finally buy those appliances that you’ve been eyeing.
I just bought a cheese freezer myself.
If you think you’ll need something, buy it now – especially imported goods!
There are still some supply chain issues to keep on your radar.
But with the dollar so strong, it’s a great reason to buy stuff.
3. What Comes Next?
We’re experiencing inflation, but not like other parts of the world.
The question everybody always wonders is: What is coming next?
Brent Johnson has an idea called the dollar milkshake theory.
Typically, in times of challenge or struggle or chaos, the dollar tends to rise.
It’s like a milkshake where the dollar keeps rising to the top.
That’s what we are seeing: the dollar is getting stronger.
It’s following the path that he’s talked about.
The Fed will tighten at some point.
They will have to reverse course.
My friend Jeff Clark talks about this.
He had an email that said the Fed typically takes between 6 to 12 months after they have raised rates before they start cutting them.
They started tightening rates in March.
As of this blog, it’s been over six months since then.
That means in the next few months they may reverse course, even though they keep raising rates.
This will eventually lead to a weaker dollar.
They can take steps to create more or try to devalue the currency to weaken it.
They don’t want the dollar to get too strong.
That hurts the economy in certain ways.
I said it before and I’ll say it again:
We have a short window.
There’s an incentive for the government to weaken the dollar because it helps with exports.
It also will help with the national debt.
How can you take advantage?
Do these things as soon as you can:
Buy things you’ll need.
Get out and travel.
Invest in stuff like metals.
Now I want to hear from you!
What do you think will happen with interest rates?
Are you going to take advantage of a high dollar?
Let us know in the comments!
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.