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Research Outline
Prepared for Ann S. | Delivered March 28, 2020
Shielding Against Recession
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Goals
To understand how to protect oneself if the US economy falls, such as if the dollar is devalued and goes into hyperinflation.
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Early Findings
Currency Collapse
Some experts have been "predicting" the collapse of the dollar for many years. Some
strategies
to protect oneself include keeping one's investments diversified and away from the dollar (such as foreign mutual funds).
Similarly, it can be beneficial to invest in
foreign companies
or companies that derive most their revenue outside the US.
Advanced investors
can also short-sell select companies that a falling dollar would hurt the most.
There is some
debate
about whether owning gold is sufficient protection against a collapsed currency market. It is possible that some countries will turn to precious metals as currency, like Mexico has done with
silver
.
Keeping assets
liquid
is also important, so investing in things like real estate is not advised.
Another advanced technique is
investing in the currency
that one believes will be the strongest against the dollar.
Hyperinflation
Focusing on
short-term bonds
is one strategy to combat future inflation. Other types of bonds can be useful, too, such as Treasury Inflation Protected Securities (TIPS) and aggressive bonds.
Stocks
are also a recommended course, which also ties in with the above of investing in foreign companies.
Again, investment in
precious metals
like silver and gold can also help combat inflation. This is because as currency values fall, the values in these tend to rise.
Cryptocurrency
There is some
speculation
that cryptocurrency could follow the same path as gold and silver in the event of currency collapse. However, it is difficult to tell without more time and evidence.
Some experts cite
Turkey and Venezuela
as examples, where cryptocurrency trading volume rose when currency values dropped.
Some speculate cryptocurrency might be
better than gold
, as there is only a fixed amount to be mined, whereas discovery of new gold stores can disrupt the commodities market.
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