Given available financial vehicles, it’s impossible to avoid speculating in a currency. For Americans, when the dollar goes up, as it did for nearly a decade beginning in 1992, baskets of foreign currencies lose value. On the other hand, choosing a single currency of any kind puts you at risk that that currency will decline. If you are in a U.S. T-bill or money-market fund, and the dollar loses one-third of its value, as it did from 2001 to 2004, your global purchasing power declines significantly.

As evidenced by the historic events of recent months, gold funds are great when the metal’s trend is up, but can lose value very fast when the trend is down. Stock funds, real estate trusts and junk bond funds all carry substantial risks of loss and default. Foreign currency funds, U.S. Treasury bill funds, money market funds and hedge funds all soar and collapse from time to time.

Currency neutrality is not achieved by buying a basket of foreign currencies. If you are invested in a foreign currency fund, you probably own some unstable currencies. In every case, you become a speculator -- you have to make an investment-timing decision not only about the goods you are buying, but also about the currency or currencies they are denominated in. In addition, everything you invest in or own creates currency exposure, whether intentional or not. Most Americans are fully exposed to the U.S. dollar.