Build exposure to international stocks when the dollar loses ground
by Mark Hulbert
Don’t look for gold to hedge a falling dollar. That may be a surprise since gold is often the first asset that investors think of when wanting to hedge against currency devaluation. Gold’s reputation has been strongly reinforced since mid-May, as the U.S. Dollar Index has lost 7% while the price of gold bullion is up 11%.
This recent performance is more the exception than the rule. To put gold’s long-term record as a dollar hedge in context, compare it to international stocks. As my MarketWatch colleague William Watts pointed out recently, non-US stocks are attractive to a U.S.-based investor when the dollar is falling, since their dollar-denominated gain will be higher than in their local currency.