We tend to be a glass half-full duo, so we don’t really have any thoughts regarding the government seizing your investments. However, with the government trying to jump-start the economy by embarking on the second version of quantitative easing, there is definitely fear that the dollar could decline in value, commodity prices could rise and the long term impact is a big question mark. So, what can you do? Here are some investment ideas that you might consider to combat a declining dollar.
• Commodities. You mentioned gold and silver, but you could include oil or a basket of commodities available through an exchange-traded fund or mutual fund that focuses on a variety of commodities.
• U.S.-based, multi-national companies. These companies generate revenue abroad, which could provide a hedge against a declining dollar.
• Foreign investments. Non-hedge mutual fund investments in stocks outside the U.S. or direct investments in foreign companies via American Depositary Receipts (ADRs) would benefit from a declining dollar.
• Currency investments. If you anticipate a decline in the dollar that could mean positive news for other currencies. Beyond currency exchanges, you could invest in a currency exchange-traded fund to benefit from this trend.
We are big proponents of diversification and a solid fundamental approach to managing your investments, so while all these ideas could be a part of a well-constructed portfolio they are definitely not intended to be an all-or-none proposition.