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Your Buck’s Not Welcome Here Anymore
Since the end of World War II, the U.S. dollar has historically been known as the world’s “safest” currency to use. That’s how the dollar came to be known as the “world’s reserve currency.” It’s why gold and oil trade in dollars.
In fact, even when foreign currencies change hands, they were generally changed into dollars first before they’re converted into other currencies. Why? Because the dollar has been trusted as a “safety zone” in international transactions.
Or at least, the dollar used to be the world’s “safety zone” currency. Turn the hands of time forward and the story’s a little different.
The Taj Mahal Refuses to Even Exchange Dollars At All
Recently, India policymakers decided that they would stop exchanging dollars at the Taj Mahal. Formerly, dollars were always welcomed. As a tourist, you could easily exchange your dollars for Indian rupees when you visited this wonder of the world. Today, that is no longer true according to India’s tourism minister.
This isn’t just an inconvenience for American tourists. It says something about the dollar’s standing worldwide. If Indian officials are officially snubbing the dollar, it shows that the dollar is losing its “safe currency” status.
By the way, India took in US$6.5 billion last year from more than four million tourists, so it’s a very big deal when they decide to take a stance against the dollar.
Think this is some sort of fluke? Think again. This “organized dollar shunning” is happening everywhere.
Most Money Changers in Amsterdam Won’t Take Dollars Either
Currency exchange outlets in Amsterdam recently stopped exchanging dollars for euros. They’re simply refusing to take dollars, even at an advantageous exchange rate for them. The dollar has been dropping so quickly lately that they are afraid that they’ll lose money while they’re making the exchange.
As one tourist was quoted as saying, “Our dollar is worth maybe zero over here.” She said, “It’s hard to find a place to exchange. We have to go downtown to the post office or central station.” It doesn’t end there.
Algeria Diversifies Their Oil Revenue Outside the Falling Buck
Algeria just took part of its oil revenue and converted it into euros, yen and British pounds according to the El Watan newspaper.
Their foreign currency reserves total more than US$110 billion. They’re also a member of OPEC. That means what they say and what they do has a huge impact on the rest of the world’s oil producers.
The White House Says, “Talk about the Falling Dollar and Look for a New Job!”
Then finally we have the White House press briefing on March 7th. Reporters asked two economic advisors to discuss the volatile economic situation in the United States. And perhaps these advisors would have, except there’s just one problem: If they talked about the falling dollar, they could possibly lose their jobs.
Don’t believe it? Check out the quote below. It’s the response from one of the two economists when a reporter asked her about the falling dollar. The reporter’s question was innocent enough. OPEC had recently blamed the recent rise in oil prices on the falling dollar, and the reporter simply wanted to confirm if that statement was true or not.
MS. PERINO: Wendell, I’m under strict instructions, and have been from the beginning, to not talk about the dollar, and I’m not going to get fired to satisfy your question.
In a nutshell, she basically went on to say, “Ask the Treasury… that’s their job.” However, all the Treasury officials say is, “we’re for a strong dollar policy” as they watch the dollar plummet.
A Short-Term Rally Will Be Followed By More Dollar Misery
Now what’s my position on all of this? I believe that because the dollar is at an extreme you’ll see it get a short-term bounce in the dollar later this year. I say that only because the sentiment in the markets is so extremely bearish (hence exchanges from India to Amsterdam not taking the buck), that we may see a short-term reversal in the markets. Also, I see gold and oil correcting shortly. When that happens, the dollar will benefit in the short-term.
Now in the longer term, commodities still probably have more upside. As they do, the dollar will probably continue to suffer against the euro and commodity currencies like the Aussie and New Zealand dollars.
If you want to set up a plan to fight against the falling dollar, setup a financial analysis with G&G Associates and we'll help point you in the right direction to secure what's left of your wealth.
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