Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

How to Profit from the Falling U.S. Dollar With ETFs

Currencies / Forex Trading Nov 20, 2009 - 08:22 AM GMT

By: Ron_Rowland

Currencies

Best Financial Markets Analysis ArticleThe U.S. dollar is falling like a rock! And while we could always see a short-term rally, I’m growing more and more convinced that the dollar is heading much lower against other world currencies.

Look at this chart below. In just the last eight months, the U.S. Dollar Index (DXY), which measures the strength of the dollar against a basket of major currencies, plunged more than 15 percent! This week it’s breaking down even further.


One of the main reasons this trend is likely to continue is that the people who have the power to do anything about it — namely the Federal Reserve, Congress and the Obama administration — are perfectly content with the situation. They might change their tune if enough voters demanded different policies, but right now there is no sign of anything different.

Dollar Index

Politicians are, in fact, happy to see the dollar falling because in the short run it seems to help the economy. U.S. exports become more competitive in the world market, while American businesses that generate revenue overseas get an added boost.

Unfortunately, the long-term consequences are not good at all … imported goods will cost us more, and overall inflation is bound to skyrocket.

The good news about this is that you can protect yourself from the falling dollar in ways that weren’t possible a few years ago. Exchange traded funds (ETFs) offer some great alternatives. So today I’ll give you a rundown on three ETF categories you might want to consider.

Dollar Crisis Shelter #1: Inverse Dollar ETFs

If you’re looking for a direct play on the falling dollar, it’s hard to do better than PowerShares DB US Dollar Index Bearish Fund (UDN). UDN gives you the equivalent of a short position in the index I charted for you above — a combination of the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Swedish Krona and the Swiss Franc.

Of course, you might do even better by concentrating on only one or two very strong currencies, or by looking at some of the emerging market currencies. You can do those things with ETFs, too, as I said in my Money and Markets column on June 18. Right now a couple of my favorite currency ETFs are CurrencyShares Australian Dollar (FXA) and WisdomTree Dreyfus Brazilian Real (BZF).

Of course, speculating in individual currencies is riskier than going with a broad index — but it may be better than staying 100 percent exposed to the U.S. dollar, which is what many investors are doing.

Dollar Crisis Shelter #2: Gold and Silver

Unlike most other metals, gold has a monetary value apart from its industrial uses. People have been using gold as a store of value for thousands of years. In other words, it is used as an alternative currency. To a lesser extent, the same is true of silver.

You can use ETFs to buy gold.
You can use ETFs to buy gold.

Gold coins and jewelry can be good investments, but for liquidity and security the gold ETFs are a better bet. They’re easy to buy, they trade online just like stocks, and they give you ownership of gold bars stored in secure vaults. Back in May I wrote a column titled: Four Easy Ways To Trade Gold With ETFs. With gold now above $1,100 an ounce, you may want to take another look at that column.

Gold isn’t the only precious metal available through an ETF. iShares Silver Trust (SLV) is breaking out, too. Silver tends to be more volatile than gold, which makes it riskier, but in percentage terms the profits can be even greater.

Dollar Crisis Shelter #3: Commodity Sector ETFs

Gold isn’t the only natural resource that goes up when the dollar falls. Oil, coal, corn, you name it — all kinds of commodities are good investments when the dollar is as weak as it is now.

ETFs provide multiple avenues into the world of commodities. You can buy funds that invest directly in commodities, or you can buy ETFs that invest in the companies that produce those commodities.

Oil is another natural resource that rises as the  dollar sinks.
Oil is another natural resource that rises as the dollar sinks.

One of my favorite commodity ETFs is GreenHaven Continuous Commodity (GCC). It holds a basket of 17 equally-weighted commodities … everything from grains to metals to crude oil.

Sometimes it’s better to own the stocks of the companies that produce these materials. They often provide substantial leverage over the actual commodity prices, and sometimes you get dividends to boot. One of my favorite ETFs in this category is Market Vectors Hard Asset Producers (HAP).

Folks, it’s not often I can say that official U.S. government policy favors one investment over the other, but now is one of those times. Yes, they make noise about defending the dollar, but that’s all it is: Noise. There’s no action behind the words.

So don’t sit still and let short-sighted politicians suck the life out of every dollar you own! With the ETFs I’ve told you about today, you can protect your money and your family.

Best wishes,

Ron

P.S. I’m now on Twitter. You can follow me at http://www.twitter.com/ron_rowland for frequent updates, personal insights and observations about the world of ETFs.

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules