Repair the Roof Before It Rains

Repair the roof before it rains.

That would be quite the appropriate comment for my personal life these days, given that January saw 21 days of rain here in Braga, Portugal, and I don’t think we’ve seen a non-rainy day yet through the first two weeks of February.

Alas, today’s dispatch has nothing to do with the weather in northern Portugal.

It’s all about China preparing for a storm.

Yesterday’s dispatch discussed China’s climb to dethrone King Dollar… and we’re not done pulling that thread today…

Maybe you saw this news recently; the Chinese financial regulators this week advised financial institutions in the Middle Kingdom to rein in US Treasury exposure. The proximate worry is concentration risk and heightened market volatility.

The dollar promptly slid lower on the news.

That’s global currency investors expressing concern that, well, China has a point—that the US dollar is no longer the safe-haven it once was because of America’s addiction to growth-by-debt, its highly unstable political situation, and trade and diplomacy strategies that are scattershot and random.

The result is the ongoing, structural diversification away from the dollar.

Now, just to be clear about this, I’m not picking on the dollar. As I always note, the greenback is a fine currency. Instead, I am sharing with you how the rest of the world sees the dollar at this point in history, because there are ramifications to our American life.

And that’s really what today’s dispatch is about.

China’s just the bogeyman I can use to dive into a broader topic of this new “Dollar Down” era.

The real point is that you—we—have to repair the roof before it rains.

This day has long been coming.

No currency has ever held onto the mantle of “global reserve” forever. Each one of them ultimately lost their grip. And losing your grip in this world, is like a tightrope walker plying their skill without a safety harness. Once you’ve lost the tightrope, the only thing stopping your fall is the bottom somewhere below.

I don’t know where the bottom is for the dollar. No one does, of course. I’ll suggest, however, that the Dollar Index that tracks the buck against a range of global currencies, will see historic lows… probably before the decade is out.

Which brings us right ‘round nicely to repairing the roof now.

Lower lows on the dollar means higher costs in your daily life.

We’ll use the daily cup of coffee as our scapegoat in this example, if only because I’ve just poured myself an iced latte.

America imports about 3.5 billion pounds of coffee annually. AI tells me that an amount of java beans that large would brew somewhere between 112 billion and 168 billion cups of coffee, or about 1.4 cups per day for every American… which seems about right.

Aside from an infinitesimally small quantity of Kona coffee from Hawaii, the US relies on the rest of the coffee-growing world to feed its addiction, by which I mean the US imports 99% of the coffee that Americans drink.

Coffee prices have been rising sharply, which I am betting you’ve noticed, given all the headlines like this one from The Wall Street Journal last year: Hell Hath No Fury Like a Coffee Drinker in 2025. The Journal reported that Americans have been going on “expletive-laden diatribes” because of rising coffee prices.

Now, some of that is a direct result of tariffs on Brazil, though those tariffs were later revoked specifically for coffee.

Another part of it is the dollar’s anemia.

As the dollar heads south, it buys fewer Brazilian reals. Last year, the dollar lost nearly 13% on the real, the worst annual performance in nearly a decade. I could run through a bit of math for you, but the end result is this: A 43.5-ounce canister of Folger’s Coffee cost $14.99 back in 2024, before Dollar Down started rolling.

Today… $22.99; I just checked the online price. A 53% increase.

That’s the thing not everyone immediately grasps: the inflationary impacts of Dollar Down.

While a weak dollar can help US manufacturers sell more tchotchkes abroad, the flip side is that is it costs more dinero for Americans to buy stuff at home because a lot of the stuff we ‘Muricans want comes from Colombia, Brazil, Mexico, Vietnam, Pakistan, France, Germany, Spain, Canada, and on and on and on.

We can’t change that.

Nothing to do with ingenuity and creativity.

Just a simple fact of economics and/or geography. Hawaii and Puerto Rico cannot grow enough coffee for America’s addiction. Nowhere in America can the country grow enough bananas… or cocoa beans… or mangoes.

We can’t mine any high-grade manganese, which is a necessity for American-made steel. Or enough uranium; US mines supply just 5% of the annual demand from already existing nuclear power plants.

You get the point.

We must import—out of necessity.

And as our dead presidents lose value relative to currencies all over the world, the cost of living in America goes up. No conspiracy here… it’s just the way the math works.

The antidote is to recognize this mathematical reality and to put some of your assets to work in non-dollar investments. Could be foreign real estate. Could be a bank account in Uruguay denominated in euros (yes, you can open a Uruguayan bank account without living in Uruguay).

Could be owning big, blue-chip foreign dividend stocks.

Good example of one of those is inside the Global Intel portfolio. We added UK-based British American Tobacco to the portfolio back in late-2023. Since then, the shares are up 113%.

A better tell, however, is the dividend.

BAT paid a dividend in 2023 amounting to £2.31. For 2025, the payout hit £2.40, up 3.9%.

In dollar terms, the payout ran from $2.90 to $3.17—a 9.3% increase.

Same stock. Same dividend.

The only difference was Dollar Down.

The greenback was down… get this… 9.4%.

Dollar Down accounted for the increase in income BAT shareholders saw. As the dollar declined, the dividends BAT paid in British pounds bought more dollars back at home.

Which is why I will wrap up today’s dispatch with another taste of Chinese wisdom: Let the wind rage and the waves rise, I will sit securely in my fishing boat… meaning staying calm in the dollar crisis that’s now unfolding, and owning foreign assets to protect your wealth.