Protect Your Portfolio When the U.S. Dollar Collapses

Clickbait titles attract clicks, but rarely does the content engage the reader. Here at Nanalyze, we can do both. When we use clickbait titles, our “time on page” metric ranks among the highest according to the Ministry of Truth, Google. Today’s clickbait title comes directly from one of our paid subscribers who asks the following question:

Do you now or have you any future plans to establish a portfolio of companies that will offset the coming devaluation (or destruction) of the US dollar?

Credit: A Nanalyze Premium subscriber

We need to break this down first. There’s an assumption that the U.S. dollar will be “destroyed,” “devalued,” or in the worst case (shudders) collapse. What do these fear-mongering labels actually mean?

How to Measure U.S. Dollar Strength

First, we need a reliable metric to measure the strength or weakness of the U.S. dollar. You may be tempted to compare the U.S. dollar to a single currency, but that’s a big mistake. Let’s say we’re comparing the U.S. dollar (USD) to the British pound (GBP). If USD declines relative to GBP, is that because GBP grew stronger or is it because USD weakened? What if both currencies weaken together at the same time, or strengthen at the same time? In order to gauge the value of a U.S. dollar abroad, we need to compare it to a basket of currencies. Fortunately, someone’s already been doing that since 1973.

The US Dollar Index – USDX

Built and maintained by Intercontinental Exchange Inc. (ICE), The US Dollar Index values the U.S. dollar relative to a basket of six curren