Quote:
Originally posted by Howard Agency
Until then, we continue to look for opportunities outside the US, particularly in
developed Europe and consumer-oriented Japan, and continue to suggest that a
small portion of a dollar-based portfolio be in gold and/or gold shares.
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I think the gold suggestion is the only really solid advice in that commentary.
They don't mention
what causes the dollar to weaken -- and their suggestion that the "reaction" to a weakening currency is to look for investment opportunities in other countries which also have fiat currencies would seem to imply that they do not really understand
why the dollar is weakening.
Inflation of the money supply is what is causing the dollar to weaken -- the U.S. happens to be "printing" dollars at a rate greater than other governments of the world are inflating their currencies, subsequently, relative to many of the other world currencies, the dollar is becoming less valuable.
But I would not consider investing in other countries as any "safe" investment to protect oneself from an inflating money supply since, at any time, those countries could start inflating their currency at a rate faster than U.S. money supply inflation -- at which point, a person's foreign investments could be at risk to a loss of value.
That is not to say there are not opportunities in investments outside the U.S. My point is that such investment does
not insulate one from the risks of a fiat money system.
Since all the world's monetary systems are fiat systems, one really cannot "escape" the "monetary inflation" risks when considering an investment. The only thing an investor can do is "constantly monitor" the monetary system influences on the investments they make --
wherever those investments happen to be.