The slumbering dollar bears have come out of hibernation. The U.S. dollar has roared back to life in recent months, climbing a solid 10% since its February low.
In the most simplified terms, that means the dollar bill in your pocket is now worth $1.10.
Your $1.00 bill can now buy 10 cents more than it did six months ago. Hint: If you are thinking of traveling abroad, you’ll likely get more bang for your buck now than in February.
Why is the U.S. dollar climbing?
The world of foreign currency trading is a zero-sum game.
That means for every winner, there is a loser.
Right now, the U.S. dollar has roared back to dominance on the world stage. The U.S. economy looks better than economies of many other G-10 nations, so that tilts favor toward the dollar. When the Federal Reserve hikes interest rates that also strengthens the dollar.
Bullish interest rate differentials
Global money managers compare official interest rates that are attached to each currency.
Essentially, the Fed is “paying” investors more to hold the dollar. The Fed’s official interest rate currently stands at 2.00%, while the European Central Bank’s interest rate stands at zero percent.
If you are a foreign investor with some money to park someplace, which would you choose? A savings account that pays zero? Or a savings account that pays 2%.
Two percent may not sound like much. Yet, a whopping $5.3 trillion dollars trades each day in the forex markets, according to the Bank for International Settlements. Two percent can add up quick on big money.
What does this mean for gold?
Gold is priced in U.S. dollars on the world marketplace. As the dollar strengthens that typically pushes the “price” of gold lower. There tends to be an inverse correlation.
If you’ve been waiting to buy physical gold, consider this.
When the U.S. dollar is gaining in the world markets, consumers are gaining purchasing power.
The flip side is true as well. When the dollar is weakening, consumers are losing purchasing power.
In essence, the stronger dollar means you can buy 10% more gold right now!
If you’ve been waiting for the “right time” to buy gold, this is it. Don’t delay.
Beware: Cycles Change
While the dollar is strong now, that hasn’t always been the case.
From 2001 to the 2008 low, the U.S. dollar index plunged 26%. That’s a huge move, and a massive decrease in purchasing power for American consumers.
The value of paper money rises and fall, especially as central banks have flooded the world’s money supply in recent years. When the U.S. dollar declines in value that means you can purchase less with it.
Right now, you’ve got a chance to buy more with the mighty dollar!
Gold is the world’s first currency and can help maintain the true purchasing power of your assets that are held in bullion and coins.
See how gold much your dollars will buy now
We think you’ll be surprised.