Protecting Your Wealth from Currency Risk

The US dollar has lost 99% of its value since the Federal Reserve was created. Here's how wealthy investors think about currency risk.

The Dollar Problem

Since 1913, the dollar has lost 99% of its purchasing power against gold. Since 1971 (end of Bretton Woods), the dollar has lost 85%+:

• Inflation: Official 3-4%, unofficial 6-8%
• Debt: $34+ trillion and climbing
• Monetization: Fed buying treasury debt

This is why wealthy people think about non-dollar assets.

Simple International Diversification

International Stock Funds

Not just US stocks:

• Vanguard Total World Stock (VT): Global market cap weighted
• iShares MSCI ACWI (ACWI): Similar, slightly different
• Developed international: VEA, IEFA
• Emerging markets: VWO, EEM

This exposes you to currency but doesn't break the bank.

Single-Country Funds

More targeted exposure:

• Switzerland: EWL (low debt, strong banking)
• Germany: EWG (industrial backbone)
• Japan: EWJ (structural reforms)

Hard Currency Alternatives

Foreign Bonds

Government bonds of other countries:

• Swiss bonds: Negative yields historically, safe haven
• German bunds: Europe's safe haven
• Emerging market debt: Higher yields, higher risk

Note: Currency risk cuts both ways—can help or hurt.

Gold and Precious Metals

The oldest money:

• GLD: Physical gold ETF
• PPLT: Platinum
• Palladium: (more industrial)

Gold up 3x since 2000, while dollar lost 80%+.

Bitcoin

For therypto-curious:

• Store of value narrative: Digital gold
• Supply cap: 21 million fixed
• Volatility: Not for the faint of heart

Down 50%+ multiple times, up 100%+ multiple times.

Real Estate International

For the geographically diverse:

• US real estate: Dollar-denominated income
• UK property: Pound exposure, strong tenant protections
• Schengen access: Portugal, Greece, Spain residency

Get citizenship/residency by investment (golden visa) = optional exit.

The Counter-Argument

Dollar strength is also a story:

• Reserve currency status: Everyone needs dollars for oil, commodities
• US Rule of Law: Property rights, courts, stability
• Military superpower: Backstop for dollar
• Innovation hub: Tech, pharma, finance leadership

Sometimes the dollar goes up when chaos rises globally.

The Practical Approach

Many wealthy families do a simple 10-20% international allocation:

This gives some currency diversification without overcomplicating.

Don't Overdo It

Common mistakes:

• More expensive: International funds often have higher expense ratios
• More complex: Foreign tax documents, currency conversion
• Trading issues: Liquidity is often lower
• Home bias is rational: Sometimes US really is the best bet

Bottom Line

Some international diversification is reasonable for $1M+ portfolios:

• 10-20% global stocks: Easy via VT or ACWI
• 5-10% gold: Hedge against monetary expansion
• Possibly real estate: If you travel regularly or want options

The key is not timing currency—you can't—but having a balanced portfolio that doesn't dependent on one currency's perpetuity.