The devaluation of the euro continues: risks and options for investors

The stability of the euro is being put to the test. Recent analyses by Morgan Stanley predict a significant devaluation of the European common currency against the US dollar. Experts at the US bank believe that the euro could fall by up to 7% in the coming months and thus reach parity with the dollar. This devaluation will not be caused solely by short-term market fluctuations, but is the result of structural weaknesses in the eurozone and the complex monetary policy situation in which the European Central Bank (ECB) finds itself. Against this background, investors should consider the potential effects of this development and reconsider their asset protection.

The consequences of such a currency loss are far-reaching and affect more than just the exchange rate. International trade in particular, where commodities such as energy are settled in US dollars, would suffer from a weaker euro. Rising energy prices would be the result, which would lead to an additional burden on consumers in times of already high inflation. This article examines the reasons for the predicted euro decline and presents alternative investments that investors should consider in times of increased uncertainty.

The ECB’s challenge: promoting growth or fighting inflation?

The ECB is faced with a difficult balancing act. The planned interest rate cuts are intended to support economic growth, but at the same time they carry the risk of further fuelling inflation and further weakening the euro. A weaker currency may boost exports in the short term, but the benefits are neutralised by rising import costs, particularly for energy, and the declining purchasing power of consumers. The ECB is therefore faced with a dilemma that can hardly be resolved without negative consequences.

The ECB’s expansionary monetary policy also comes in the context of a generally weakening European economy. Many member states are struggling with low growth and high unemployment. This economic weakness makes it difficult to keep the currency stable. While interest rate cuts could make it easier to lend, they carry the risk of the euro losing further value – with profound effects on European markets and consumers.

Political instability as an additional risk factor

In addition to the monetary policy challenges, the political situation in Europe is also contributing to the uncertainty. Geopolitical tensions, particularly the ongoing conflicts with Russia, are having a negative impact on the region’s economic stability. Internal conflicts within the European Union and uncertainties regarding future political developments are also exacerbating the situation. This combination of economic and political risks makes the euro particularly vulnerable to fluctuations and makes it difficult to stabilize the currency in the long term. For investors, this means that currency risks are becoming more of a focus and alternative investment strategies must be considered in order to avoid asset losses.

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Tangible assets as protection against currency risks: real estate, gold, precious stones and agricultural land

property

Given the volatility of the euro, investors are increasingly focusing on tangible assets as an alternative investment. Real estate is traditionally considered a solid and stable investment. It not only offers a tangible asset, but in many cases also provides ongoing income through rental income. However, the real estate market is also fraught with risks. In many regions, especially in the urban centers of Europe, real estate prices have become very inflated. This poses the risk of price corrections that could reduce the value of investments. In addition, political measures such as rent controls and tax burdens can have a negative impact on the return on real estate. The low liquidity of real estate investments is also a problem in times of crisis, as quick sales often result in significant losses.

Gold

Gold, on the other hand, has been seen as a „safe haven“ in times of crisis for centuries. Its value is historically stable and it is considered a protection against inflation. However, gold also has disadvantages. The price of gold can fluctuate greatly, especially in periods of strong market volatility. In addition, gold does not generate any ongoing income, which makes it a purely speculative investment whose profit potential is determined solely by future price increases. Storing and insuring gold can also be expensive, which further reduces the return. Despite these limitations, gold remains a valuable form of investment that offers a reliable way to protect assets, especially in uncertain times.

Agricultural land

Agricultural land is another solid investment. The value of agricultural land has risen steadily in recent decades as global demand for food and renewable resources grows. Agricultural land not only offers investors a stable asset, but also the opportunity to generate ongoing income through agricultural use. In addition, agricultural land is largely independent of fluctuations in the financial markets. However, the risks here should not be underestimated either. Regional differences in soil quality, climatic conditions and legal requirements for land use can influence the yield and long-term value of agricultural land.

gems

Investment gemstones, particularly colored gemstones such as rubies and sapphires, represent another tangible asset. These gemstones are characterized by their high value density and rarity and are less affected by short-term market fluctuations. Their historical crisis resistance and long-term value stability make them an interesting option for investors who want to diversify their portfolio and assets. These investment gemstones not only offer an excellent opportunity to protect against inflation, but also an attractive alternative tangible asset investment. Deutsche Edelsteinhaus also offers expert advice to help investors enter this valuable asset class. The combination of aesthetic value and financial security makes crisis investments in gemstones worth considering.

Conclusion: Tangible assets as an anchor of stability

Alexander Streeb, founder of Deutsche Edelsteinhaus and financial expert for over 30 years, emphasizes: „In times of growing uncertainty and economic challenges, tangible assets are a crucial building block for securing assets in the long term.“ The ongoing volatility in the financial markets as well as political and economic risks underline the importance of investing early on in stable alternatives such as precious metals, real estate and other alternative tangible assets.

If you would like to learn more about options for asset protection and the background to the current economic situation, Deutsche Edelsteinhaus is offering a free webinar. The following topics will be covered in this webinar: