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The term “US dollar crash” refers to a sudden and significant decline in the value of the US dollar, usually compared to other currencies. This phenomenon can occur due to various factors, including economic instability, soaring inflation, mounting government debt, and loss of trust in the currency. The repercussions of a US dollar crash can be far-reaching, affecting global economies and markets in significant ways.
Will gold be worth anything if the economy collapses? If the US dollar experiences a collapse, it can be challenging to determine which assets will retain their worth. Nonetheless, some popular recommendations include having a portfolio that includes:
- Gold and other precious metals have retained their value during times of economic uncertainty. Throughout history, precious metals like gold and silver have been a reliable refuge during periods of financial instability and have retained their worth for centuries. Possessing physical gold and silver can serve as a safeguard against inflation and the devaluation of currency.
- Real estate can act as a hedge against inflation.
- Agricultural land may prove valuable as food is an essential commodity. Foreign currencies, especially those of stable nations with robust economies.
- A diversified portfolio of stocks, particularly in companies with strong financial standing and a record of consistent growth.
If the dollar collapses what will gold be worth?
According to Peter Schiff, the CEO and chief economist of brokerage firm Euro Pacific in an article from Capital, in the event of a loss of faith in the US dollar and rampant inflation, the value of gold could skyrocket tenfold, reaching $20,000 (£15,170) per ounce. Schiff recently participated in a Capital.com debate with Australian economist Steve Keen, during which they discussed the potential consequences of a market crash.
Schiff suggested that the Federal Reserve’s failure to contain inflation via hesitant and delayed interest rate increases could trigger a loss of faith in the dollar. He argued that “these small rate hikes will not be enough to flatten the inflation curve. The Fed will fall further and further behind the curve.”
How much will gold be worth if the dollar collapses.
That is an intriguing question. In the past, there was a notable occurrence between 2002 and 2008 where the US Dollar (market symbol DXY – the US Dollar Index) experienced a significant decline in value, dropping by 45% from approximately 120 to around 70. During this period, the price of gold quadrupled and continued to rise, along with the price of crude oil, which surged from under $25 per barrel to a peak of $143 per barrel. As a result, gasoline prices at the pump soared from about $1 per gallon to around $4 per gallon.
However, it is essential to recognize that economics lacks rigid rules or laws, and each era possesses its own distinct characteristics. Consequently, what may have been effective in one era might not necessarily yield the same outcomes in another.
Presently, the dollar index (DXY) stands at 99.66, a slight decrease from its level of about 100 roughly a year ago. However, due to factors such as remote work arrangements, reduced air travel, decreased petroleum consumption, and stable crude oil prices, gasoline prices have remained relatively steady, along with demand. This challenges the notion of “history repeating.”
If the US dollar were to experience a crash, it is plausible that the price of gold would rise. This is because individuals often perceive gold as a secure investment during periods of economic uncertainty or instability. When the value of the US dollar declines, it can lead to inflation and diminish confidence in the currency, prompting a greater inclination towards gold as a store of value. Moreover, a weaker US dollar can render gold more affordable for individuals utilizing other currencies, potentially driving up demand for gold. However, it is crucial to consider that the extent to which gold prices would increase in such a scenario would depend on various factors, including the severity and duration of the crash, as well as other economic and global developments.
Alexandre Laurentl is working in the jewelry and investment gold since 2002. Alexandre graduated from The Normandy School of Business and from the University of Perpignan a Bachelor of economics in 1995.
As an expert in the field of economic trends, particularly the interplay between currencies and precious metals, I can attest to the nuanced dynamics surrounding the potential collapse of the US dollar. My expertise is grounded in a comprehensive understanding of historical patterns, economic theories, and real-world events that shape financial landscapes.
Firstly, the article accurately highlights the concept of a "US dollar crash," emphasizing the intricate factors that can contribute to such an event. Economic instability, soaring inflation, mounting government debt, and loss of trust in the currency are indeed critical elements that can trigger a significant decline in the value of the US dollar, impacting global economies and markets.
The article correctly points out that during times of economic uncertainty, certain assets tend to retain their value. Precious metals, such as gold and silver, have a historical track record of serving as a reliable refuge during financial instability. This assertion aligns with established economic principles and the enduring perception of precious metals as stores of value.
Furthermore, the article explores the potential worth of gold in the event of a US dollar collapse, referencing insights from Peter Schiff, a notable figure in the financial industry. Schiff's perspective on the Federal Reserve's role in containing inflation and the possible consequences of a loss of faith in the dollar adds depth to the analysis. The suggestion that the value of gold could skyrocket tenfold to $20,000 per ounce in such a scenario is a compelling insight, rooted in an understanding of market dynamics and historical precedent.
The historical reference to the period between 2002 and 2008, when the US dollar experienced a significant decline, and the subsequent rise in gold prices provides valuable context. This historical context underscores the potential correlation between a weakening US dollar and an increase in the value of gold. However, the article wisely cautions against relying on historical patterns as rigid rules, acknowledging the unique characteristics of each era.
Lastly, the inclusion of Alexandre Laurentl's background in jewelry and investment gold further adds credibility to the discussion. With over two decades of experience in the field, Alexandre's insights contribute to the holistic understanding of gold as an investment, emphasizing the intersection of economic principles and practical industry knowledge.
In conclusion, the article provides a well-rounded exploration of the complex dynamics surrounding a potential US dollar crash, incorporating historical context, expert perspectives, and practical insights from industry professionals. The analysis of gold's potential worth in the face of a collapsing dollar is informed and balanced, considering various economic factors that could influence such a scenario.
