The U.S. dollar has entered a period of instability that most investors haven’t seen in decades. Morgan Stanley reported an 11 percent decline in the first half of 2025, the sharpest drop since the early 1970s. The broad dollar index (DXY) is down more than 6 percent over the last twelve months. These are not soft moves. They signal a currency losing strength at a time when global markets rely on it the most. Morgan Stanley, Trading Economics
A weakening dollar affects everything. Import costs rise. Inflation pressure returns. Borrowing becomes more expensive. Purchasing power erodes. Portfolios that depend on dollar stability become more exposed. When the foundation shifts, the assets tied to it shift with it.
This is why investors are revisiting hard assets. They don’t depend on currency strength to hold value.
Why the Dollar’s Weakness Matters
Currency Erosion
When the dollar declines, every dollar buys less. The Federal Reserve Bank of St. Louis has shown a clear depreciation pattern against both major and emerging market currencies in 2025. This feeds directly into higher costs and a weaker real return on cash. Fred Blog
Confidence is Deteriorating
Analysts have described the trend as a crisis of confidence in what used to be the safest corner of global markets. When trust breaks, capital relocates quickly. Investopedia
Structural Pressures
Fiscal deficits, slow growth forecasts, and geopolitical stress are all weighing on the dollar. Morgan Stanley projects that the currency could fall another 10 percent by the end of 2026. Morgan Stanley
Given this backdrop, relying on financial-market instruments or fixed-income exposure denominated in dollars becomes a bigger risk. When the dollar weakens, dollar-based markets weaken with it. Hard assets hold their ground.
Why Hard Assets Win in Volatile Cycles
A. Inflation-resilience with income
Inflation remains above long-term targets, and volatility is persistent. Assets that can reset rents, adjust pricing, or capture replacement-cost inflation have a built-in advantage. Real estate checks all three boxes. Operating properties produce income. Development and value-add assets capture appreciation through execution.
B. Protection against currency erosion
Hard assets do not lose value simply because the currency does. Land, buildings, and operating assets exist independent of dollar strength. With the dollar down more than ten percent against major currencies, that insulation matters.
C. Supply constraints strengthen value
Hard assets are shaped by availability and need. In many markets, including Colorado, supply has not kept pace with demand. Housing inventory is tight. Absorption is steady. Occupancy in multiple corridors remains in the high nineties. When supply stays constrained, values remain steady even when financial markets are unstable.
D. Value created through development, not sentiment
Public real-estate vehicles and stabilized portfolios can hold value, but they rarely generate the upside that comes from entitlements, construction leverage, strategic land positioning, and disciplined exits. Development-driven value creation isn’t tied to currency performance. It is tied to execution.
What This Strategy Looks Like in Practice
In this environment, the strongest real-estate strategies focus on:
• Markets where supply is restricted
• Assets supported by population and migration trends
• Operations that generate income with an identifiable upside path
• Locations where absorption consistently exceeds new inventory
Investors should ask three direct questions:
Can this asset hold its value when the dollar moves?
Does it produce income now or in the near term?
Is there clear, measurable upside?
The dollar’s decline raises the stakes on each of these.
Why This Matters Now
The challenge is not only that the dollar is weakening. It is weakening at a time when multiple conditions overlap:
• Inflation remains above target
• Fiscal policy is stretched
• Global markets are fragmenting
• Correlations across public markets are rising
• Traditional diversification is losing its effectiveness
In this setting, hard assets are not supplemental. They are necessary.
Conclusion: The Counterweight Investors Need
The dollar’s slide is not a temporary story. It is a structural signal. In a world where currency instability undermines purchasing power and weakens traditional assumptions, real assets offer what dollar-based markets cannot: stability, income, intrinsic value, insulation from currency risk, and upside driven by execution, not speculation.
Hard assets are not the defensive allocation in this cycle. They are the strategic one.