Are you tired of worrying about the falling US dollar? Are you scared that its value will drop so low that redenomination will occur due to inflation? You aren’t alone when you feel this way.
It’s happened in parts of Europe, Africa, Asia, Australia, New Zealand, and other parts of the world. The US doesn’t have immunity. If inflation gets too far out of hand, the value of the dollar plummets and redenomination becomes a serious possibility.
How can you protect yourself if this were to happen? It’s relatively easy even though so many of us tend to overlook the obvious. You can begin cutting your exposure to the US dollar by investing in gold.
Before we get into the merits of initiating a gold IRA rollover, we will define redenomination first. Afterwards our readers will better understand the topic and clearly see the dangers it presents if it were to happen.
A Brief Explanation of Redenomination in Plain English
The goal of redenomination is to change currency. In particular, the process will change the value of currently circulating as coins and banknotes. And this process might happen for a number of different reasons that include:
- Inflation plays the biggest role in redenominating certain currencies. As an example, inflation might skyrocket in a particular country. Because of this, a coin or banknote might be so tiny that it no longer possesses any real value. So the small coin or banknote is no longer used and taken out of circulation. Only the larger denominations continue to remain in use.
- Redenomination could happen for other reasons as well. In fact, decimalization took place in countries that once used the pounds-shilling-pence system.
- It also happens in cases when countries form a monetary union.
A more recent example is the European Union. Certain countries in Europe came together to create a monetary union. So, the currencies previously used in these countries were redenominated and the Euro became the accepted currency. In fact, 19 countries in Europe took their existing currencies out of circulation and now use the Euro instead.
How Redenomination Can Hurt Your Financial Wellbeing
Before we begin, please note that redenomination isn’t necessarily bad or evil in every situation. But there’s one major area where it can negatively impact your retirement unless you have a precious metals IRA.
In some situations, a currency becomes so inflated that it goes through devaluation. This is what many Americans fear now. Many large countries no longer want their currency backed by the good faith of the US government. They feel that the US has too much power and they plan to take it back.
Guess what? Now that other countries have lost faith in America and the dollar, it no longer maintains the same value it once did. Plus, due to other factors the dollar’s severely inflated and it’s only a matter of time before the bubble bursts.
When you combine these two serious problems, you see the writing on the wall. You see that the US isn’t the major player it once was. You see that other countries are getting tired of their financial stranglehold over other nations. And you see that they are taking steps to release their country from the grip of the US dollar.
How the US Dollar Became so Vulnerable
It shouldn’t shock you to learn that the way to protect yourself from redenomination is to move away from the US dollar. Yes, it’s true. You no longer need to leave all of your eggs in one basket. In fact, it’s downright dangerous to do so.
Say the US dollar suddenly collapses out of thin air. What would you do to survive? You worked your whole life to build a nest egg for you and your loved ones. And now, through no fault of your own, it’s gone.
The hundreds of thousands or millions of dollars’ worth of banknotes you’ve saved have no value any longer. No one in America wants them because they are worthless. No one in other countries wants them because they aren’t worth the paper they’re printed on.
Why did this happen? It happened because in 1971 Nixon decided to take the US dollar off of the gold standard. Beforehand, every US banknote was backed by its equivalent in gold stored in a bank vault. Now the dollar is backed by “the good faith of the US government” which means less and less today.
Clearly, the US dollar is more vulnerable than ever since it came off the gold standard. But you don’t have to remain a potential victim.
The Only Way to Protect Yourself from Redenomination
Have you figured it out yet? We’ve dropped plenty of hints at this point. But to clear things up, the only way to protect yourself from redenomination is to buy gold.
Why buy gold you wonder? Well, there are a number of reasons that include:
- It’s really easy to buy and sell gold. You can buy gold coins and add them to your gold IRA account as an investment.
- You can test the content of your gold coins before buying. This gives you the ability to prove that your investment is real.
- It’s the only form of legal tender recognized around the world. If you need to relocate because of a potential disaster, your gold will be accepted no matter where you land.
- It’s a way to hedge your investments against inflation. In fact, when the US dollar goes down in value, the value of gold tends to rise. And vice versa. Owning gold during times of financial turmoil means increased value over time.
How to Begin Investing in Gold
Now that you see the value in gold, it’s time start investing. You can approach this a few ways that include:
- Opening a precious metals IRA. Once opened, you can begin buying gold and other precious metals and grow them for your retirement.
- Initiate a gold IRA rollover. This way you’ll gain the ability to invest in gold and other precious metals for retirement purposes.
- Buy gold coins and keep them at home. Not recommended because you lose the tax advantages of a self-directed IRA. You’ll also need a safe to store and protect them. And you’ll always worry about thieves stealing what’s rightfully yours.
Make it a point to learn about gold IRA investing. Knowledge is power. It’s the best way to create a safe and secure future for you and your loved ones.
Also learn about the current gold IRA custodians. Many have bad reputations. Some are known scammers. Others have been accused of fraud. Or take our word for it and trust our one and only recommendation.
Do you have any questions on redenomination or about how you can protect yourself from it with a gold IRA? Ask below!
I can testify that the US dollar in Africa is now headed downhill. And we attribute this to the inflation that does not look like will stabilize in the near future.
This is really eye-opening. I have come across articles that talk about investing in Gold, but not as elaborate as this.It has really brought out the soon to be reality in matters investing and wealth. At least gold is something appreciated in the entire world.
Thank you for taking your time to explain this concept. Great read!
Hello Carol and thank you for the encouraging comment!
Hello David,
Gold is a currency used around the world but on all stock markets, it is priced in US$. I can see the way people are clamouring to get away from the dollar as it is like all other currencies and none of them are safe at the moment.
Personally, I don’t believe any of the precious metals will be a safe bet if the world currencies start collapsing.
Derek
Hello Derek and thank you for the comment. Unfortunately, I completely disagree with you and let me tell you why. You’re making comparisons with two different thiings: one is a gold stock, which does not represent physical gold and the other option is a gold IRA in which you hold physical gold. We do not advocate investing in stocks, bonds, or ETF’s of any sorts because of the precise association with currency, especially the US currency as you pointed out. Precious metals, especially gold, tend to rise in value as the dollar weakens in value and this is especially true when you hold them in physical form. This is because the dollar is a fiat currency printed by quantitative easing by the Fed. Basically, the dollar keeps getting printed all the time by the Fed and this causes it to decrease in value, but when it does gold and other precious metals DO increase in value (not stocks – because gold stocks are based on gold mining companies, not actual ownership of physical gold). Again, we advocate in investing in physical gold which rises in value as the dollar depreciates (this is not a matter of opinion, this is just a known phenomenon), not gold stocks or any paper assets which are connected with fiat currency. Thank you for the comment.
There is absolutely nothing wrong in going back to basics in preparation for safe retirement, or even planning for contingency if ever the country will be severely hit by inflation or even redomination. Gold investment has gone a long way since time immemorial and it has been proven as one of the strongest and safest investment equivalent to monetary resources. A lot of monetary valuables are rising in financial industry such as bitcoins and virtual money but the assurance of its longevity in the market is still questionable.
My father used to say that we should invest on things that increases in value such as lands and jewelries because time is adding more value to its price. It’s pretty much like the gold investment you are talking about. Thanks for explaining everything about this important issue. I know it’s not only applicable to USA but to most countries in the world. Your expertise on this matter has been giving knowledge to your readers on how to deal with monetary crisis through gold investment.
Hello MissusB, and thank you for the comment! Your father is indeed correct, as we advocate in investing in a self-directed precious metals IRA which can not only hold physical precious metals, but also physical assets such as commercial real estate and oil & gas. You can also invest in cryptocurrencies with a self-directed IRA. Thank you for sharing your experience with us as well! I appreciate your encouraging comment!
I had no Idea about the U.S Dollar losing value. That’s freaky. Its nice to see a site about something interesting and important. I hope that more people learn about this. I have been confused about this though. When I went to China I was blown by how cheap everything was in U.S Dollars. I’m not sure what that means for the dollar I’m not really an expert but it is interesting.
Hello Marlo and thank you for the comment and the inquiry. The U.S. dollar is losing value because the Federal Reserve continues to print money with nothing to base it on, but it still hasn’t lost all its purchasing power. It’s just losing it steadily. This is why gold and precious metals are increasing in value – because inflation and the continuation of the printing of currencies will only make precious metals more valuable. Thank you for dropping by!
You’re one of the few people I’ve come across who knows exactly what’s going to happen to the US Dollar. It’s not a matter of if, but a matter of when, and I’ve been studying this for ages. People are conditioned to trust the Federal Reserve and up until recently, other nations were conditioned to trust the US government and the US Dollar. Well, just as with any currency, hyperinflation causes the currency to collapse and when it happens, not a single soul in the world will accept it, as Voltaire once said, all paper currencies eventually revert to their original state.
I was in a debate with my dad over this, and he can’t understand why I’m opting for gold rather than simply doing what most people do, and when most people do something to him, it’s the way things should be done for some strange reason, and simply invest in a 401(k) and put paper money back for retirement (I’m 28, by the way). He said it worked for him and it worked for his dad, before giving off numbers to back his point.
However, what he fails to understand are the elements of a) inflation, and b) purchasing power. He also fails to understand that fiat currency can’t be used to convert into a new currency, because at that point, the US Dollar is beyond worthless. I tried proving my point with the inflation calculator, as well as the boom-bust cycles such a currency creates, as well as steeper pricings of goods, but when you talk to someone in their fifties that are set in their ways, it’s not going to convince them.
Sadly, many people my own age think this way, because it’s what “their parents taught them.” Well, their parents aren’t experts on currency value. While I’m no expert myself, listening to you and others like Ron Paul (where just about every one of his monetary predictions come true), people with a high level of credibility are who I’ll turn to rather than just a parent who knows next to nothing about inflation and what happens when inflation rises too much. It’s one reason why the Soviet system collapsed in the late 1980s-early 1990s.
Hello Todd – it seems like you’re having a “Rich Dad, Poor Dad” conflict here but I’m not really old enough nor rich enough to be the rich dad haha – a lot of times, parents are accustomed to a set way of thinking but that just means you have to explain it to them more lovingly and in words that they’ll understand more. Parents who wouldn’t understand inflation and purchasing power would not be able to understand any other deep economic concepts when you explain it to them in those words, but I still believe you can explain it to them using more simple terminology. For example, tell them that gold will always hold its value, while a dollar will not ever buy the same thing many years from now. An ounce of gold bought a nice suit in the early 1900’s and it still does now. However, a dollar bought you 10 loaves of bread then, but you can’t even buy one loaf with it now. That’s just one of the examples I use to explain inflation and purchasing power. Don’t let such trifling matters get in the way of the love you have as father and son. Thank you so much for sharing your experience with us! It’s always a pleasure to hear your feedback.