What Is a dollar collapse and when will it happen?
The collapse of the dollar simply signifies that the value of the U.S. Dollar has lost value or “plunged.” This can cause uncertainty and unease about the dollar as a currency. Anyone who holds dollar-denominated assets will sell them at any cost. That includes foreign governments and investors who own U.S Treasury Bills, Bonds and Notes, as well as foreign-exchange futures traders and individual investors. When the dollar crashes, these parties will demand assets denominated in anything other than dollars. When the dollar collapses, everyone will be trying to sell their dollar-denominated assets but no one will want to buy them.
What could lead to a dollar collapse? The “Factors of Three”
First, there must be an underlying weakness in the economy and in the overall performance of the dollar-which we have seen. With the U.S. national debt increasing from $5.5 trillion to $16 trillion within a 10-year period (from 2003 to 2013), the U.S. Dollar has declined in value more than 54%. Today, the debt continues to worsen, surpassing $21 Trillion and counting, leaving the Debt-to-GDP ratio over 100%. This means that the U.S. Debt is higher than our Gross Domestic Product. This dire situation is considered irreversible by the government. Therefore, it should not come as a surprise that the U.S. Treasury Department has adopted policies to lower the value of the dollar in an effort to make it easier to repay its debt with cheaper money.
Second, there must be a viable world reserve currency alternative to the dollar for everyone to use. Since 1973, when President Nixon abandoned the Gold Standard, the dollar has become the world reserve currency. However, challenged by the Euro between 2002 – 2012, the dollar continued to drop in value year after year. This provided China, Russia, Iran and others the opportunity to consider creating a new currency to maintain trade stability. And with China being the largest foreign holder of more than $1 trillion of U.S. Treasuries, it was the perfect investment to solidify its Yuan, while dethroning the U.S. Dollar as the “King of All Currencies.” Today, with more than 41 countries abandoning the dollar after recording its worst year ever in 2017 with a 12% loss, China’s central banker Zhou Xiochuan took it a step further demanding that the Yuan replace the dollar in order to maintain global economic growth. This statement forced President Trump to rethink trade policies. Unless drastic and urgent changes are made, the collapse of the dollar is inevitable.
Third, there must be a catastrophic economic event, such as stock market crash that destroys confidence in the dollar. Early signs of such events have been occurring since early in 2018. The recent political threats including tariffs and the overvalued stock market has increased the volatility and lowered the confidence in dollar. The market’s recent 10% correction exposed the fragility of Wall Street and reminded investors and retirement account holders of the 2008 market crash.
What would happen after a collapse and how to protect yourself?
A sudden dollar collapse would create global economic turmoil. This means demand for U.S. Treasury Notes would plummet, and as a result interest rates would rise, prices would skyrocket, causing and resulting in inflation. This would stifle business growth, increase unemployment and send the U.S. back into recession and possibly even a depression.
In order to protect yourself from the impact of the collapse of the dollar, you must first defend yourself from a gradual dollar decline. That means diversifying your assets to shield your portfolio from the devaluation of the dollar. A sound investment would be one that will survive the economic chaos. It can be liquidated when needed, easy to move and preserve its value at anytime and anywhere in this world. A safe investment that Allegiance Gold will offer you in an unsafe world.
Why wait until it’s too late? Even well-known investors and wealthy figures have been rushing into physical assets such as gold and silver and away from any paper-based assets such as stocks, mutual funds, bonds and ETFs to ensure the survival of an inevitable dollar collapse and a certain market crash. Why don’t you?
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