What Happens When The US Dollar Crashes?
While you’re researching reasons to invest in gold, you may have come across the fact that the value of gold becomes stronger when the US Dollar crashes. Inflation is rising, interest rates are going up, and there is some financial uncertainty looming in the world—especially after what happened in 2020. If you are wondering what happens when the US Dollar crashes and how it may come to that, we can help. Keep reading to learn more about what happens when the US dollar crashes and how investing in gold will help protect you.
How Would the US Dollar Crash?
According to Investopedia, the root of any dollar collapse stems from a lack of faith in the stability or usefulness of money to serve as an effective store of value or medium of exchange. As soon as users stop believing that a currency is useful, that currency is in trouble. This can be brought about through improper valuations or pegging, chronic low growth, or inflation. The fundamental weakness of the U.S. dollar is that it is only valuable through government fiat. This weakness is shared by every other major national currency in the world and is perceived as normal in the modern age. However, as recently as the 1970s, it was considered a somewhat radical proposition. Without the discipline imposed by a commodity-based currency standard (such as gold), the worry is that governments might print too much money for political purposes or to conduct wars.
What are the Effects of the US Dollar Crash?
If a recession suddenly spiraled out of control, the value of the dollar can become worthless. If this happens and the US dollar crashes, there are many likely things to happen. They include the value of your 401(k) becoming affected, prices rising, and different currencies becoming dominant.
- Value of your 401(k). According to Zack’s, your 401(k) grows on a tax-deferred basis. You pay income tax on your withdrawals and a 10 percent penalty on withdrawals made prior to reaching the age of 59 1/2. If the dollar collapsed, the federal government might attempt to rectify the issue by raising taxes to settle debts. This would mean you would lose more of your money to taxes when you eventually made withdrawals.
- Prices rise. Inflation would spike exponentially, thanks to the increased cost of imported goods. This will cause issues with Americans getting loans, as well as issues with retirement accounts suddenly becoming worthless.
- Digital currency. According to Investopedia, Digital currencies are currencies that are only accessible with computers or mobile phones because they only exist in electronic form. Typical digital currencies do not require intermediaries and are often the cheapest method for trading currencies. All cryptocurrencies are digital currencies, but not all digital currencies are cryptocurrencies. Some of the advantages of digital currencies are that they enable seamless transfer of value and can make transaction costs cheaper. Some of the disadvantages of digital currencies are that they can volatile to trade and are susceptible to hacks.
- Precious Metals as currency. In addition to digital currency becoming more valuable, precious metals will become more valuable as currency as well. Mexico is currently remonetizing silver, and this could happen to the US if the dollar crashes. The more silver and gold you already have invested in your portfolio before the dollar crashes, the stronger and more stable your US dollar becomes.
Preparing for a Recession with Gold
As mentioned, precious metals can be considered a very valuable currency if the US dollar crashes. You can protect your existing retirement accounts by investing in gold to hedge against inflation and protect your family’s future. In addition, you don’t have to worry about your 401(k) becoming worthless. A Precious Metals IRA allows you to invest in precious metals for retirement, giving you even more for the future should the US Dollar crash.
About Priority Gold
Luckily, the US dollar isn’t predicted to completely crash anytime soon. However, nobody has a crystal ball and it is impossible to predict the future. The crash of the US dollar happens when recessions do. Recessions so happen, and with one on the horizon, it is important to protect yourself just in case.
This makes investing in gold and other precious metals all the more important. If you are ready to invest in gold to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink.
We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping to streamline their precious metals purchases at a fair price, selecting the right precious metals portfolios, and meeting their important financial objectives.
We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. And gold shows up on schedule, easy to liquidate should you need the money quickly. Priority Gold guarantees the highest standards of customer service, which comes with honesty, professional conduct, and the Ethical Code of Business.
For more information about investing in gold, retirement tips, and more, visit us at prioritygold.com