BRICS nations, which is a powerful grouping of the world’s leading emerging market economies, is currently on the path to dethrone the U.S. dollar’s dominance worldwide by potentially launching a common currency for trading. While this does not necessarily mean that a financial crisis is imminent, it is adding to an international shift away U.S-dollar dominance, known as de-dollarization, which could have long-term repercussions for the economy and investors. The Financial Post recently turned to Sightline Wealth Management to learn more.
“The benefits to a country with reserve currency status include significant liquidity and a reduced level of exchange rate risk,” explains Paul de Sousa, senior investment advisor at Sightline Wealth Management. “But one of the biggest is the ability of an indebted government to reduce borrowing costs. Most countries hold their dollar reserves as U.S. government bonds and that high demand drives down bond yields.”
However, now as the U.S. financial system becomes more volatile and fragile, countries such as BRICS have been incentivized to look for options beyond the U.S. dollar. If a potentially rapid de-dollarization scenario does occur in the near future, de Sousa tells the publication that investors may want to rethink their portfolio allocations. One way that investors can protect their portfolios, is by diversifying their assets with alternatives such as physical gold.
“Gold is a hedge against inflation and, in an emergency, something that can easily be converted to cash in a transparent market,” de Sousa says. “With thousands of years of value behind it, gold is not the type of asset we see people buying and selling as prices fluctuate — it’s more of an insurance policy and a store of generational wealth. If money itself lets you down, gold is there to offer stability.”
Click here to read the entire Financial Post article.
Important Information
Sightline Wealth Management LP (“Sightline”) is an investment dealer and is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). Sightline provides management and investment advisory services to high-net-worth individuals and institutional investors.
Sightline Wealth Management LP is a wholly owned subsidiary of Ninepoint Financial Group Inc.
(“NFG Inc.”). NFG Inc. is also the parent company of Ninepoint Partners LP, it is an investment fund manager and advisor and exempt market dealer. By virtue of the same parent company, Sightline is affiliated with Ninepoint Partners LP. Information and/or materials contained herein is for information purposes only and does not constitute an offer to sell or solicitation to purchase securities of any issuer or any portfolio managed by Sightline Wealth Management or Ninepoint Partners, including Ninepoint managed funds.
Sightline Wealth Management (“Sightline”) makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Sightline assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Sightline is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Past performance is not indicative of future performance. Please speak to your Advisor regarding the suitability of information provided in this article for you. The opinions, estimates, projections and/or recommendations contained in this document are those of the author as of the date hereof.