Make a Buck off a Sagging Dollar

The greenback’s long-term trend is down. We name funds, stocks and gold plays that should benefit.

After an ugly start, the past year was a good one for most kinds of investments. One glaring exception was the U.S. dollar, which steadily lost value against most of the world’s major currencies. And the dollar’s prospects for 2010 and beyond don’t look promising. U.S. economic growth is sluggish. The nation is running huge budget and trade deficits, and we don’t save nearly enough money, so we must import massive quantities of foreign capital each year to help close those yawning gaps. Over the next ten years, the outlook for the dollar is “bleak,” says Rob Arnott, who manages more than $43 billion for Research Affiliates.

The reason for Arnott’s pessimism can be summed up in a four-letter word: debt. Arnott says the ratio of all public-sector debt -- a figure that includes the debts of federal, state and local governments, as well as those of such government-sponsored enterprises as Fannie Mae and Freddie Mac that are now nestled on Washington’s balance sheet -- to gross domestic product is a towering 141%.

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Contributing Writer, Kiplinger's Personal Finance

Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.