Jason Zweig is advising investors to hold international stocks and bonds as a hedge against a shrinking dollar.
In the Intelligent Investor column Should a Shrinking Dollar Worry You?, Zweig notes that the U.S. dollar is down to 0.68 euro, down from 0.80 in March and a peak of 1.21 in 2000.
Zweig found that foreign stocks and bonds beat out currency trading, gold and commodities as a way to offset a falling dollar. The logic is simple, when the dollar declines, anything denominated in foreign currency becomes more valuable.
For foreign bonds, Zweig recommends the SPDR Barclays Capital International Treasury Bond Fund (BWX). The $1.3 billion fund invests in fixed-rate local currency sovereign debt of investment-grade countries outside the United States and currently yields 3.9%.