There has been much talk these days about the weakness in the dollar and concerns of massive inflation. As the economy continues to limp along sentiment is beginning to become more negative.

Most people in the US are aware at this point that the Federal Reserve is printing money faster than ever before.  I heard a stat the other day that staggered me a bit: two trillion printed within the last two years.  To put that into perspective, it took 214 years for the US to print the first $1 trillion.  What most people don’t understand is that the reason the US can get away with this is because we are the world’s reserve currency.  Being the reserve currency means that there is demand out in the world because other countries need US Dollars to buy oil and trade with each other.

If the US loses its status as the world’s reserve currency we will no longer be able to continue to print money like we do to bail ourselves out.  Additionally all of the Dollars that we have printed will come home to the United States, because demand worldwide will drop, and this will create massive amounts of inflation, possibly hyperinflation.

So the lynch pin for the dollar is its status as the world’s reserve currency.  So let’s look at some recent announcements from around the world that calls this status into question.  February 10th of this year the IMF announces that they have a plan to use the SDR as the new world reserve currency and they would like to print $2 trillion dollars worth per year for the next few years.  March 2nd of this year China announces that by the end of the year they will allow cross-border trades to be settled in the Yuan instead of the Dollar.

These two announcements within the last month show how desperate the situation is for the Dollar.  Unfortunately most Americans do not understand how these occurrences affect the Dollar and therefore are completely unprepared.  One way to protect yourself from the dramatic effects of a loss of reserve currency status is to own precious metals.  To buy gold coins is a very simple process and provides superior protection as well as potential for growth during this generational bull market we are experiencing.

Precious metals are known for their ability to hedge against falling currencies and inflation.  They have been used for portfolio diversification for years.  We maintain the belief that owning precious metals is important, now more than ever.