Here’s the Best Way to Hedge the Weakening U.S. Dollar and Buying Gold Isn’t the Move

Build exposure to international stocks when the dollar loses ground

by Mark Hulbert
Market Watch

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.

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