Commodities are another great way to profit from the dollar's fall. Certain commodities (such as oil, gold, and other metals) preserve their long-term wealth. Most are bought with US dollars, so when the dollar falls compared to other currencies, commodities rise. Another option for investing your money during an economic collapse is to put it in a savings account.
A savings account won't offer the same potential benefits as investing in gold or real estate, but it's a safe place to store your money. In addition, savings accounts are insured by the FDIC, so you won't lose your money if the bank goes bankrupt. Kiplinger has the support of its audience. When you buy through the links on our site, we may earn an affiliate commission.
Here's Why You Can Trust Us. Seek refuge in a fund that invests heavily in foreign bonds, such as Loomis Sayles Bond. Stay away from most other “safe havens”. Since then, investors have channeled that cash into more aggressive investments.
Be a smarter, better-informed investor. Get benefits and thrive with Kiplinger's best advice from experts on investments, taxes, retirement, personal finance and more, direct to your email. Leverage and thrive with the best advice from Kiplinger experts, direct to your email. How can you protect yourself from the fall of the dollar and take advantage of it? Start by favoring large companies in their individual stocks and in the mutual funds they hold.
Large companies are much more likely than small ones to generate substantial revenues and profits abroad. Next, make sure you have enough long-term money in foreign stocks and funds, especially in fast-growing emerging markets. These countries have an enormous competitive advantage because they pay low wages. But don't stop there.
Buy a globally diversified foreign bond fund or Loomis Sayles Bond. Gaffney and his co-managers, including the dubious Dan Fuss, who created the fund 18 years ago, currently have 28% of their assets invested in foreign-denominated bonds. A large part of that is found in emerging markets. Loomis Sayles Bond is an unrestrained fund.
Invest in investment-grade corporate bonds, high-yield “junk bonds”, Treasury bonds, mortgages and convertible securities, as well as foreign bonds. For the past ten years, until October 13, the least expensive but oldest institutional stock class achieved an annualized return of 9.1%. The fund, which is a member of Kiplinger 25, has a current yield of 6%. I prefer Loomis Sayles Bond or a foreign bond fund to commodities, which I wrote about last week, gold or treasury securities protected against inflation (TIPS).
Traders who get their finger on the trigger have come to dominate commodity markets, so much so that it is increasingly difficult for grassroots investors to obtain fair prices. You won't lose money with TIPS if inflation increases, but the fall in the dollar is likely to drive up bond yields, bringing down TIP prices. After all, TIPS are Treasury bonds. I doubt that you will do much better than reaching the break-even point in TIPS for the next two years (see Don't count on TIPS).
Goldberg (biography (opens in a new tab)) is an investment advisor. A major economic collapse could require more than investing in precious metals and foreign currencies. Precious metals such as gold and silver have been used as currency and store of value for centuries. Investors often turn to gold when they are concerned that inflation will erode the purchasing power of their paper money holds.