The Falling Dollar Is Exactly What Gold Has Been Waiting For

By Erin Fischer

Falling U.S. dollar got you down? Well, it shouldn’t if you own gold. If you’ve been paying attention to the precious metals market, the falling dollar has been nothing but good news for metals prices. For those of you who don’t own gold already, you might want to consider doing so sooner rather than later… In 2017, you may have watched gold teeter around the $1,250 per ounce mark with relatively few noticeable surges in price. And in contrast to the booming stock markets and the wildly soaring bitcoin, you might’ve been a little apprehensive about adding more gold. However, a combination of recent trends—including a weaker dollar—suggest the yellow metal could be about to enter a new bull market.

What’s to Blame for a Weaker Dollar?

Over the past decade, we’ve watched a seemingly endless supply of cash flow into equities as the Federal Reserve continues to grow its balance sheet. In fact, the rising Fed balance sheet and the growth of the S&P 500 align almost perfectly.

In the past few months, however, the dollar is responding rather unusually to Fed tightening policies for some of the worst losses since 2003. This has had a positive effect on gold—which remained a top-performing investment, even when other commodities took a hit in response to tightening measures. In direct correlation to the falling dollar, gold has continued to rise since early December, reaching its highest levels since September, when the metal briefly jumped over $1,300 per ounce.

The dollar’s decline is largely a result of international efforts to move away from U.S. treasury bonds and transition to a new world reserve currency. As nations like China, Russia, and Saudi Arabia continue to introduce bilateral trade agreements that undercut the U.S. dollar, the dollar will become progressively weaker.

Furthermore, the trillions of dollars of federal debt incurred in the past decade—which served to temporarily revive equities and the economy—has begun to backfire, beginning with the dollar. And the Fed’s attempts at hiking interest rates to counteract a decade of debt accumulation haven’t helped matters either. On the contrary, these hikes have sent the dollar on a progressive decline.

But this isn’t all bad news. DoubleLine Capital CEO Jeffrey Gundlach argues that this is positive news for commodities, which typically see growth when the dollar is down. He even went as far to say that he expects commodities to soon outperform stocks.

Gundlach explains that commodities may see a few good years, noting, “Usually when you get a bad year in the dollar, it’s followed by one or two more bad years.”

And Gundlach isn’t the only expert to hold this opinion, other financial analysts expect commodities to continue to hold strong through 2018 and into 2019.

Because the dollar serves as a standard for pricing and purchasing commodities, a weaker dollar effectively makes it more expensive to buy commodities. A weaker dollar also tends to challenge faith in the U.S. Treasury and economy—thus causing gold price to rise, due to its role as a hedge against uncertainty.

Buy Gold While the Dollar is in the Early Stages of Decline

So, while a weaker dollar is concerning for U.S. consumers, it does wonders in improving confidence in gold and other precious metals. To add gold to your portfolio while the dollar is still in its early stages of decline, you can now purchase 1-ounce gold American Eagles at exceptional premiums. Gold American Eagles are the most widely traded bullion coins in the U.S., and right now, you can purchase them for as low as Spot + $39 per ounce*. To invest in gold American Eagles while they’re available at these low premiums, please call us at 800-831-0007 or email us.

*Prices subject to change based on market fluctuation and product availability. Prices reflected are for cash, check, or bank wire. Free shipping, handling, and insurance are available for 1-ounce gold American Eagle purchases of 10 ounces or more. Offer expires Friday, February 16, 2018, or while supplies last.