Some experts believe the recent speculation that the U.S. dollar is losing its global reserve currency status is overhyped and premature. Others feel USD’s enduring dominance is severely under threat.
Lynette Zang, chief market analyst for ITM Trading, is a firm believer that de-dollarization — the movement wherein countries aim to reduce their reliance on the U.S. dollar as the dominant global currency — is well underway and that the U.S. dollar is set to lose its standing as the world’s dominant reserve currency.
Speaking to Stansberry Research’s lead media anchor Daniela Cambone, Zang said, “This banking crisis is not over. Maybe they’ve been able to paper over it, and so everybody is calm, and you have consumer confidence going up and all of this other kind of garbage. But it’s built on a house of lies.”
Although the dollar has weakened modestly in 2023 and has lost ground to other currencies, it “remains close to a 10-year high versus currencies of countries with which the U.S. trades,” according to a Charles Schwab commentary. The American dollar is still the primary currency for global trade and financial transactions and has the world’s best financial markets.
But the country’s ongoing inflation woes, debt worries, bank failures, the possible introduction of a central bank digital currency (CBDC) plus the fear of future fiscal deterioration are forcing many Americans to look for alternative investment routes before the soup hits the fan.
“I’m saying you take advantage of it and get everything in place, because we are inside of a major hurricane. There’s no doubt about it,” Zang said. “It isn’t just the death of the dollar. It’s the death of the entire financial, monetary and social system.”
Where To Keep Your Cash as the Value of the U.S. Dollar Diminishes
Where does Zang recommend you put your money in this time of economic upheaval? Preparing in the face of a reset, investors should look for assets with a proven track record, that are outside of the system and those that will hold their value and purchasing power. For Zang, that means investing in gold.
“The reason why I believe you are seeing central banks accumulate massive amounts of gold is so that they retain their power through the shift,” she said, adding, “That’s exactly the same reason I buy gold.”
While not immune to its own price fluctuations caused by supply and demand dynamics, economic conditions and investor sentiment, gold’s value has endured through economic and political upheaval and currency devaluations. Gold has been used as a store of value for centuries.
Its historical resilience and its ability to retain value over time gives investors a confidence boost. Although it doesn’t generate income like stocks or bonds, gold is a proven hedge against inflation due to its scarcer production than fiat currencies (government-issued currencies not backed by a commodity).
“Buy anything which you think is going to hold its value,” said Zang about gold. “That’s been understood for thousands of years…but 100% of the time there is demand for it and what other asset can you say that about?”
More From GOBankingRates