There are always two sides of a coin. The same rule applies to economic issues. The dollar is both an affected and an affecting factor to the economy of the United States. Its rise and fall impacts the U.S. in many ways. Its growth and decline is in turn caused by the U.S. economic status.
On the statement, “the dollar is both an affected and an affecting factor to the United States economy,” can be further explained by the fact that when the economy in general is at stable grounds, the dollar’s status follows the same direction. When economic issues become a problem, the dollar is also in trouble.
How the dollar performs on currency exchange rates affect different sectors. Prices of some commodities, interest rates, and other trade related values respond in a negative manner when the dollar ends poorly at the end of a day’s trade. These variables in turn dictate the overall status of the economy too.
Reactions to the Dollar Collapse Scenario
These are everyday challenges which any currency faces. To say that the dollar will collapse is a differeCredit: Image: dream designs / FreeDigitalPhotos.net | http://www.freedigitalphotos.net/images/view_photog.php?photogid=1449nt story. This article’s question reveals different types of responses from the Internet world. Some depict a common citizen in panic. They are provoked even further by scaremongers predicting even the actual date of when the dollar is supposedly going to collapse. On the other side of the coin, there are individuals who are positive that the economy will rise up again and no dollar collapse scenario is to be feared. Instead of cultivating national fear, these suggest recommendations and alternatives instead to have the problem resolve.
Inflation and Investments
Finding investments which are able to hedge inflation is one of such recommendations. Inflation is described by an upward trend of prices and interest rates when the dollar depreciates in value. Although there is practically no form of investment which is not affected by inflation at all, there are those which have minimal movement at the U.S.A. exchange rates even during inflation.
Investments against Inflation
Some of these investments include specific stocks and bonds, real estate properties particularly commercial structures and lands, commodities of agricultural or industrial background, and precious metals like gold and silver.
Among precious metals, investing in gold has never been more popular in recent years. This is attributed to a few reasons. Gold had been used as a fiat currency as early as 3,000 years ago and had been the most stable among all other government imposed currency. The consistent demand for gold is also another factor. It is in constant demand due to various industries wherewith it is used. It is applied in monetary currency particularly for coinage, in jewelry and other aesthetic items, in arts and architectural structures, in medicine particularly dentistry, in computers and electrical appliances for conductivity purposes, and even in space related projects.
This demand is in contrast to the other side of the coin in which supply is scarce. If in case gold is available, it may not be easily accessible. Other forms of gold investment include funds, stocks, and bonds. Gold funds capitalize in companies which mine and convert gold in industry standard forms. The same can be said of gold stocks and bonds. The only major difference is the time frame involved. Stocks can be traded and the profit collected faster as compared to bonds which are often profitable only after they reach a maturity date agreed upon by all parties involved.
Physical gold may also be invested upon. Here include gold bullion in bars or coins. Bars or ingots are valued based on purity and not on weight. Weight is used for the ratio alone when measuring the real value of gold. The percentage of purity is measured in relation to the item’s weight. Coins on the other hand are valued based on a few factors. These include rarity, gold percentage, and the coins overall condition.
Any of these investments coupled with practical means are better alternatives to speculating when the dollar collapses, if it does. Preparing for the future and wisely spending time and energy for improving one’s personal economic and financial status in turn helps the dollar and the national economy improve.