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Should you de-dollarize your portfolio?

by Rachel MillsApril 21, 2023
Rolled bundles of major currencies and country flags

At least partially? The dollar dump is accelerating…

"Slowly at first, then all at once..."

The death of the dollar is not certain by any means. But recent events have accelerated the globe's urge to diversify away from dollar hegemony rather rapidly. In 2001 the US dollar constituted a whopping 73% of global reserves. Today that has dropped to 58% and it is no wonder. 

A reserve currency with wide acceptance and use necessarily needs to be apolitical and reliable. Weaponizing the dollar against Russia with sanctions signaled to the whole world that that is no longer the case. The United States has pivoted to using the dollar for statecraft, to enforce foreign policy goals. The world is watching and realizing that this is a threat to their national sovereignty.

Heavy reliance on the US dollar now means abiding by the foreign policy views of whatever US president is in office, on whom they do not get a vote. Being on the other side of this equation has to be a little scary. No wonder they are slowly backing away and looking for other ways to transact.

This reduction in global use of the dollar will affect its value, including here at home and including the dollars already in your bank accounts. This trend could reverse with new American leadership - or it could double down. This remains to be seen.

Gas prices are headed back up.

Another driver of inflation to watch is gas prices. We already know OPEC is cutting production and our Strategic Petroleum Reserves are dwindling, right in time for summer driving season, which is right around the corner.

When the Biden Administration began tapping into the SPR to ease gas prices (and inflation) during the pandemic (and midterm election season) they promised OPEC they would refill them later at a benchmark price. That benchmark came and went with no purchases. OPEC sees this as a betrayal and are cutting production in retaliation. This tit-for-tat is likely to hit us all financially.

“I think OPEC is reawakening the inflation monster,” said Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA. “The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while.”

Our economy runs on gas. If gas goes up in price, everything gets more expensive and your paycheck buys less and less. Even worse, what happens to your savings and retirement accounts?

Getting rich and staying rich are 2 different skill sets.

"There are a million ways to get wealthy, and plenty of books on how to do so. But there's only one way to stay wealthy: some combination of frugality and paranoia." - Morgan Housel, The Psychology of Money

This is an important concept to understand. Wealth can be easy-come-easy-go. It can also be tough-as-nails come, and then easy go in a flash seemingly overnight. Earning money and building wealth takes optimism, hope, hard work, day-to-day involvement and embracing risk. It takes grit and sweat and you get an amazing adrenaline rush when it works.

But those same traits can lose you a fortune overnight.

There comes a time when you have to switch into wealth preservation mode. That means a healthy amount of paranoia and pessimism. You have to balance risk-taking behavior with an appreciation of safety.

It is the classic tortoise and the hare scenario. Building wealth can be a heart-pounding, all-out effort to sprint to the finish line. But there is a final lap in the race, and that is preserving your wins. That is where the tortoise's slow and steady approach wins the day.

And on that last lap, you might have rabbits sneering at you, flaunting their jackpot gains, while you're sitting at 2%. But when they crash and burn 10 feet from the finish line, you're crossing it calmly with your wealth still intact.

Part of that endgame, we believe, is an allocation of precious metals.

Precious Metals IRAs - the wealth preservation hack we need right now

Are you aware that you can put the power of precious metals into your retirement plans? The Lear Capital Precious Metals IRA is backed by gold or silver, a real asset that has risen over 50% in value over the past 5 years. A Silver or Gold IRA rollover account from Lear Capital may reduce the volatility of your retirement portfolio. It is smart, safe, and positioned for growth!

The authorities at Lear Capital have been assisting clients maximize their savings with precious metals like gold and silver for over a decade. Gold and silver combine physical, tangible asset with the modern tax-advantaged features of an individual retirement account, which is beneficial for all Americans. Precious Metal IRAs, including gold and silver, also help diversify against the volatility and risk of your retirement portfolio. Gold and silver allow clients to potentially preserve wealth and may even maintain IRA dollars by increasing the store of value of physical metals to your retirement. The trend of investing in gold and silver has been steadfast - even the global Central Banks have become net buyers of gold.

Call us today if you're ready to lock in your price on gold and silver, either for home delivery or a gold-backed IRA.

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