Is it good to invest in US Dollar? | Dollar vs Gold comparison 101

Have you invested or planning to invest in Dollar? Is it good to invest in US Dollar? Will the Dollar collapse in near future? Are you confused and looking for Dollar vs Gold comparison?

If so, then this article is written for you. I will try to discuss briefly and analyze which one is the safe investment option, Dollar or Gold.

U.S national debt

Do you know how much is the U.S national debt? It is well over 26 trillion Dollars, and increasing by 1 trillion Dollars every year. U.S budget is in deficit for the past 20 years and each year government is taking more money through various borrowings, just to pay off the debt it already owes.

Bretton Woods agreement

Do you know why U.S has a leading position in global economy for the last 70 years? It is not because “America is Great”, it is because of Bretton Woods agreement of 1944.

In that agreement, world’s dominant countries agreed to use American Dollar as global reserve currency. Since then, Dollar became international trade’s principal currency.

Gold backing

Initially, Dollar printing was backed by Gold. This meant that more dollars could not be produced without increasing the gold reserves. However, 27 years later from the above agreement, U.S government detached the Dollar from the gold standard. Since then, the only thing backing the Dollar’s value has been faith that the US will maintain the integrity of its currency.

Now, as U.S is sinking in the national debt and the Dollar is weakening, many countries are looking to transition away from Dollar then ever before. They are only looking for an excuse and current global pandemic (COVID-19) might be the excuse to end Dollar supremacy.

Best Dollar alternative – Gold

Experts suggests having a diversified portfolio and not to put all eggs in one basket. However, if you must make a single choice and looking for Dollar investment alternate, the best possible alternative is investment in Gold.

Gold vs Stock Market

Stock markets all over the world have reached new heights in the recent years. However if you compare the last 20 years, stock markets vs Gold prices, Stocks rose by 250 percent whereas Gold prices increased by 500 percent.

The reason for the best Return on Investment in Gold is its limited supply. All the gold ever mined across human history would fit in three Olympic swimming pools. The economics principle is, where there is shortage of supply and demand is more, the result is increase in value.

Every central bank in the world is holding Gold because of its universal acceptance. If the Dollar is removed from global trading currency, the currency replacing it will be the one having most Gold pegging. If that happens, the Gold value will sky rocket.

Ways of investing in Gold

There are multiple ways to invest in Gold.

  1. Buy Gold physically (Risk of theft or stolen)
  2. Invest in a Gold Fund (Safest option)
  3. Cryptocurrencies backed by Gold (Risky)

Conclusion

Based on the above, it is easy to conclude that keeping Dollars as investment is risky and investment in Gold is a better option as compared to investment in Stock Market.

Let me know in comments, what are your thoughts.


Credits for facts and figures : The Great Devaluation


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