Although the U.S. dollar has lost strength and may get weaker still if another stimulus package is unleashed, there are ways to protect your purchasing power by using exchange traded funds (ETFs).
The efforts of the U.S. government to salvage the economy has led to a deflation of the U.S. dollar. Gary Gordon for ETF Expert says that any investor must consider going forward that there are ways to hedge against inflationary pressures that stem directly from less valuable dollars in circulation.
When it comes to reasonable-risk returns to overcome inflation/dollar devaluation, Gordon notes the appeal of precious metals, thanks to their relatively lower risk. SPDR Gold Shares (NYSEArca: GLD) carries a risk grade of 76, compared to the S&P 500 which gets a grade of 83.
Even though gold is around $1,000 per ounce, and the other precious metals may look enticing, there are still reasons to like gold. (Is gold overheated?)
That being said, don’t forget about silver, which is outperforming gold these days. iShares Silver Trust (NYSEArca: SLV) is up 43.8% year-t0-date. (Why silver is outperforming).
No rally’s continuance is guaranteed. Watch the trend lines and have an exit strategy for when gold decides it’s done. (How to follow trends).
For more stories about precious metals, visit our precious metals category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.