One of the big financial questions today is whether the U.S. dollar is on the decline — and if so, how Americans can protect their money and purchasing power. Recent economic shifts, foreign policy changes, and market data suggest that the greenback may be weakening after years of strength. While this isn’t a financial crisis (yet), it’s sparking concern among investors, analysts, and everyday people trying to safeguard their savings.
Is the U.S. Dollar Really Declining?
The U.S. dollar has been relatively strong since the end of the 2008–2009 financial crisis, peaking in 2022 according to the dollar index. However, that momentum has slowed. Some economists now argue the dollar is “breaking down,” not just because of rising tariffs, but due to a broader reversal in U.S. foreign economic policy.
Recent shifts include:
- The U.S. pulling back on contributions to global institutions like the WTO, IMF, and World Bank.
- Talk of reducing funding for international programs, raising concerns about long-term influence.
- The U.S. dollar being considered overvalued in purchasing power parity (PPP) terms — currencies like the euro and yen are seen as being undervalued by as much as 50%.
This suggests the dollar's strong run may be due for a correction — or, in simple terms, a pullback that reduces its global buying power.
Why a Declining Dollar Matters
When the dollar weakens:
- Imports become more expensive, driving up prices on goods.
- Travel abroad costs more.
- International investments may yield better returns.
- U.S. debt becomes harder to manage, especially if interest rates rise.
For investors and savers, this environment can quietly erode wealth unless steps are taken to hedge against the decline.
6 Ways to Protect Yourself If the Dollar Declines
1. Buy Precious Metals (Gold & Silver)
Gold is historically seen as a hedge against inflation and currency weakness. In 2025, gold is already up 21.43% year-to-date and 24% in the past 6 months — even as stock markets have fluctuated. Silver offers a similar store of value and tends to follow gold’s movements.
2. Invest in Foreign Currencies or Currency ETFs
Another way to hedge against a falling dollar is through Forex (foreign exchange) trading or currency-based ETFs. For instance, the euro is up 8.11% year-to-date, outperforming the dollar in several key metrics.
Currency ETFs like FXE (Euro) or FXY (Yen) offer a simple way to gain foreign exposure without trading directly.
3. Diversify with International Stocks and ETFs
Many U.S.-based portfolios are overexposed to domestic companies. By investing in global giants like Nestlé — which is up 25% this year and pays a 3.33% dividend — you gain access to diverse revenue streams across various markets.
International ETFs like VEU or VXUS can also provide broad global exposure.
4. Invest in Real Assets (REITs, Real Estate, Farmland)
Tangible assets tend to hold their value during currency declines. Real estate investment trusts (REITs) let you invest in property without owning it directly. For example, Camden Property Trust is up 11.44% in the past year and offers a 3.53% dividend yield.
These assets provide both potential appreciation and steady income — two things that protect against a devaluing dollar.
5. Treasury Inflation-Protected Securities (TIPS)
TIPS are government-backed bonds that adjust with inflation, preserving your purchasing power. You can buy them directly at TreasuryDirect.gov, or through a broker. They offer a low-risk hedge for conservative investors worried about rising costs and a weaker dollar.
6. Consider Cryptocurrencies (Cautiously)
Some see Bitcoin and other major cryptocurrencies as “digital gold.” Unlike fiat currencies, crypto isn't tied to central banks or national debt. Bitcoin is up 15% in the last 6 months, 9% YTD, and an eye-opening 985.8% over the past 5 years.
But be careful — the crypto market is volatile and unregulated. Avoid meme coins and focus on projects with strong fundamentals if you go this route.
Final Thoughts
There’s no need to panic — but ignoring the signs of a potential U.S. dollar decline could hurt your savings long term. Diversifying your portfolio and hedging against currency devaluation are smart strategies no matter what the markets are doing.
None of this is financial advice, but these are common methods people use to protect themselves. As always, do your own research and consider speaking with a trusted financial advisor to tailor a plan that works for your goals and risk tolerance.
The dollar may not be in freefall — yet — but the time to prepare is before the storm hits.