In spite of the rise of the debt ceiling and the reduction in spending, many are speculating that a weaker dollar is inevitable. In response, as evidenced by the plummeting markets, investors have been lightening their portfolios at hastened speeds. With international investors shedding dollars, a teetering deficit, a Chinese policy to increase consumption and interest rates that discourage trading in dollars it’s easy to understand why. That said there is another option: investing in companies that will rise from the declining dollar and the increase in exports.
Over the past decade the dollar has fallen 31 percent. During this time people have made money from the decline in the U.S. currency in a number of ways ranging from., investments in gold or foreign currencies and holdings in American companies that operate internationally.
Gold: When the dollar is weak, an investment in gold is considered a safe haven. Earlier in the year many were declaring the dollar a bubble but have snce reversed their stance. The weak economic data and fear within the markets continues to push gold to new heights. An ETF like SPDR Gold ETF (GLD) is a safer investment than in miners though the latter are disparately low in comparison with demand for the precious metal.
Swiss Francs: A strong balance sheet country with low debt and considerable growth prospects, Switzerland is everything the U.S. is not right now. The promise of stability drove the currency to an all time high in advance of the deficit resolution and again after it. Even Moody’s promise to maintain the U.S. Aaa credit rating was not enough to deter jittery investors toward the franc and away from the dollar and the equally messy euro.
Companies with Strong International Sales: The weaker dollar may encourage companies overseas to ramp up current exports on the basis that they are receiving a better deal. Strong American companies with considerable overseas sales are likely to have even more in the coming months. This is especially true for companies like Deer& Co. (DE) and Caterpillar (CAT) which dually the serve the rising demand for food in fast developing nations like China and India. Other options include Coca-Cola (KO) which is expected to see a 3-plus percent sales increase this year.