Many who predicted that the incoming Obama administration would bring about a “D Dollar Down” in the markets have failed completely. While there is indeed some very low risk investments in the global markets, the Dollar is actually in a free fall. While there are still moments when the dollar can be pushed lower, it has already fallen to lows not seen since the early 80’s. This leaves many investors wondering is this the best time to buy gold or invest in other assets?
It is no secret, the world’s economy is in trouble right now. With the recent downgrade of the American economy by the Federal Reserve, markets across the world have been disrupted and currencies have lost value. The economic outlook for the U.S. is far from great at this point in history. At the same time, the rest of the world is facing an economic crisis of its own, with China and India leading the way. As such, there are far more questions than answers as to the course of action for today’s economy.
For the moment, let’s look at the bigger picture. While there is certainly cause for concern in the U.S., it does not mean the markets will crash. Far the opposite is true. With the recent economic slowdown, there are many positives in the markets including the fact that unemployment is at an all-time low, consumer confidence is at an all-time high, and we have successfully overcome our worst financial crisis since the Great Depression. In fact, we have never experienced so much strength in the American economy since the 1950’s.
Now, there is still a global economic crisis, which means we are currently in a transitional period where a number of governments will need to adjust their monetary systems to a free market environment. However, even though we are at a significant risk of default, there are still ample opportunities to profit if you can properly navigate the markets. The two major currencies that are weakening right now are the Australian Dollar and the Canadian Dollar. These currency pairs are: the Australian Dollar (USD/AUS) and the Canadian Dollar (CAD/CAD dollars).
In addition to these currencies, there are numerous others on the decline as well including the Swiss Franc (CHF), the British Pound, and the Japanese Yen (JPY). However, since the American Dollar is largely based on U.S. Dollar reserves and economic strength, many traders see this as a good opportunity to make money if you purchase the dollars denominated in the USD while they are still strong. The weakness in the American Dollar has been caused primarily by a slowing economy in the U.S., a poor climate in Europe and Asia and a large exporters deficit. Meanwhile, the Canadian Dollar and British Pound are strong because the economies in these two countries are relatively strong, especially in manufacturing.
The question then becomes how one can profit from this global economic dilemma. The answer is very simple, you buy the dollars that are lower in value than the dollar you have in your account. Keep in mind that this isn’t the same as purchasing an IOU. With a currency, you are trading financial security. The Canadian dollar and the British pound are considered relatively safe investments because they are considered major currency by both international and local governments, and they have significant potential for growth.
This market has created many opportunities for savvy investors. The problem that investors have had in the past has been determining when is the appropriate time to purchase. If you look at historical data, you will find that currency rates generally fluctuate up and down over the course of several months.
While you wait for the dollar to go down to a level that makes it a good investment, there are other things that you can do to help boost your portfolio. The two most important elements that have helped me achieve good results in the past are using technical analysis and diversifying my investments across many different markets. By focusing on a few select sectors, you will always know where your money is at all times. Now would be a great time to learn more about these strategies to make more money and secure your financial future!