Over the past year, the United States dollar rose 9 percent compared to the Euro. These are the first major, positive movements of the dollar, since the economic crash in 2008. The rise in the value of the dollar is also the best sign for a positive recovery in the United States. That being said, some market analysts believe that a rising dollar is a sign that investors should shift their investment portfolio’s focus to more appealing investments that will, maximize gains and earn a steady return.
Throughout this blog post, I will guide you through some of the best investment opportunities, based on the strengthening of the U.S. dollar. Please be mindful that these ideas are based upon current economic conditions, and not a guarantee of future success.
What should you invest in now?
Given that the U.S. economy is growing stronger than analysts expected, the long-term outlook shows real promise in three particular areas: shipping, manufacturing and gold.
- Shipping- A strong dollar means that goods will be cheaper in the United States. This translates into additional shipping. For the first time in almost a decade, the United States dollar is trending in the right direction. Investing in the shipping containers that deliver economic prosperity around the world, is a great way to profit from economic growth and the strength of the dollar. With all of the established and proposed container shipping alliances, the major shipping companies will be turning a profit as container prices rise and expenses fall.
- Manufacturing- The reason why the dollar is stronger is because of a 4.6 percent growth in GDP in 2014. Instead of looking solely at the dollar, consider the economics behind this movement. Who benefits the most from a strong dollar and economy? The answer is manufacturers. Look at the earnings of manufacturers, if you have an interest in investing in the manufacturing companies that are benefiting from a stronger consumer base.
- Short Gold- Over the past 10 years gold has risen to as high as $1900 per ounce. Currently, the precious metal sits at $1220 per ounce. Using ETF funds, you might want to short gold as the price continues to drop. Since the U.S. dollar is loosely based upon the price of gold, when the dollar gains, this precious metal loses value.
The Future of the Dollar.
Over the next year , the American dollar is expected to continue to rise steadily, even as Europe continues to be challenged by debt and China’s booming economy begins to slow. This means that investing now, while the dollar is strong, is regarded by some investors as a good long-term investment strategy, that will endure obstacles in future markets and produce above-average returns.