VIEW IN BROWSER  |  FREE REPORTS  |  PREMIUM SERVICES

Can You Count the Albatrosses Around the Dollar’s Neck?

By Charles Sizemore, Chief Investment Officer, The Freeport Society

It’s starting to smell like a dead bird.

In Samuel Taylor Coleridge’s poem The Rime of the Ancient Mariner, a sailor shoots an albatross—a creature sailors once saw as a good omen.

In doing so, the ship is cursed.

The wind dies, the sea turns slimy, and the crew begins to suffer terribly.

His crewmates, desperate and dying, hang the bird around his neck as a symbol of guilt and doom.

Today, the U.S. dollar wears its own version of that dead bird.

Burdened by decades of unchecked debt, a profligate Congress, gross mismanagement by the Fed – and now a trade war that’s causing America’s allies to turn their backs on it – the dollar is no longer the unchallenged symbol of strength it once was.

Markets still cling to it. But beneath the surface, the winds are dying… and the sea is getting slimy.

Worst Year for the Buck Since 1973

The U.S. currency just had its worst first half of the year since 1973.

The U.S. Dollar Index (NYICDX) measures the performance of the greenback against a basket of major trading partner currencies.

As you can see, it slipped 10.8% through the end of June.

There are a multitude of reasons for this…

With the national debt closing in on $37 trillion, investors are starting to question the “full faith and credit” of Uncle Sam.

We add trillions of dollars to that total every year. The One Big, Beautiful Bill Act the Senate just approved will add trillions more.

Stop and let that sink in.

For all of the pearl clutching over the One Big, Beautiful Bill blowing out the deficit, killing the bill wouldn’t come close to erasing it either. It would only cut the deficit by about $200 billion… leaving it at $1.5 trillion.

The drunken sailors in Congress would still be spending us into oblivion. They’d just be doing it at a slightly slower rate.

The trade war didn’t exactly help either.

Bludgeoning our trading partners with the highest tariffs in a century didn’t make them feel warm and fuzzy about holding dollars and dollar-denominated bonds.

And then, of course, there’s personnel drama at the Fed.

Jerome Powell’s term as Fed chair is up next May. The great unknown of who will replace him – and whether they’ll follow President Trump’s orders to lower interest rates – is just one more albatross around the dollar’s neck.

It doesn’t take a genius to see that the only way any of this is getting paid down is by way of massively depreciated dollars.

Traders are starting to pile in – with hedge funds recently recording their largest short position in the dollar in over four years.

There’s just one problem…

Recommended Link
Don’t let another big opportunity pass you by…
If you missed Bitcoin in 2011, Tesla in 2012, or NVIDIA in 2016, you know the sting of regret…Now the master trader Jeff Clark has uncovered a new opportunity. He calls it “Crossfire” — and it could hand you gains of as much as 1,285% in as little as two days. Don’t let this become another “what-if” moment. Watch his free briefing now.

Which Dumpster Fire Blazes Brightest?

The dollar may be a dumpster fire. But shorting it (betting on its further decline) isn’t likely to be a great trade for you.

To start, remember what the U.S. Dollar Index is.

It’s a weighted basket of major trading partner currencies that includes the euro, the British pound, and the Japanese yen. About 57% of the index is the euro, with the yen and pound making up another 14% and 12%.

All of these currencies are garbage.

As recently as 15 years ago, during the European Union’s sovereign debt crisis, it looked like the Eurozone might be ripping apart.

Who knows – it still might.

The debt-to-GDP ratio of the Eurozone is 87%. That’s lower than the 124% for the U.S., but it’s still embarrassingly high.

And among some of the larger countries, the story is worse. Italy is more indebted than the U.S. with a ratio of 135%. France is nipping at our heels at 113%.

As for Britain, its debt burden sits at 101% of GDP. So much for “sound as a pound.”

Japan takes first prize with a debt to GDP of 250%.

None of these countries can consistently balance a budget. All have spent themselves into deep holes.

So, I don’t see any of their currencies as a viable escape from the dollar’s ongoing demise.

How to Protect Your Wealth

The dollar may be the worst offender when it comes to financial mismanagement. But ultimately, all fiat currencies face the same fundamental set of problems.

Their citizens don’t like paying taxes.

But they expect pensions, health care, and assorted social services.

And they vote.

So, politicians have every incentive to borrow and spend – leaving the problem for some other poor schmuck to deal with.

The only way to protect yourself from this is to simply avoid having large chunks of your net worth sitting in cash.

Stocks aren’t a perfect currency hedge, but they do generally keep pace with inflation over time.

And good businesses find ways to make money even in a broken financial system.

I refer to these high-quality businesses as the Rich Man’s Supercurrency because they’re the preferred store of wealth and purchasing power for the wealthy.

They’ve been a mainstay at our flagship Freeport Investor advisory since we launched in December 2023.

One of my favorites – Walmart (WMT) – is up about 93% so far in the model portfolio.

No matter what happens tomorrow – war, pestilence, inflation, deflation, chaos, hellfire and brimstone – I know Walmart will adapt and thrive. That’s what good companies do.

I also recommend you protect yourself with “anti-dollar” hedges gold and Bitcoin.

Both have been performing wonderfully versus the dollar since I added them to the Freeport Investor model portfolio when we launched.

Gold is up 65%. Bitcoin is up 155%.

I can’t tell you what the dollar does tomorrow. Given how badly beaten up it is relative to the other major world currencies, it may very well enjoy a short-term bounce. That would be normal trading activity.

But the longer-term trend is intact.

The dollar is in decline thanks to several stinking, dead birds around its neck.

Act now to protect your wealth.

To life, liberty, and the pursuit of wealth,