Dollar bulls got an early holiday gift with the surge in the value of the U.S. greenback. They can tender their gratitude to signs of a rebound in the U.S. economy and even to Congress, whose last-minute deal to extend tax cuts helped out a bit.

Perhaps the biggest vote of thanks is owed to the European Union, however. Without the fiscal troubles of Greece and Ireland weakening the group's common currency and even calling into question its very survival, the euro may well have offered a more tempting alternative to traders, speculators and investors wary of the impact of the Federal Reserve's $600 billion quantitative easing plan.

SHIFT OF POWER

Few analysts are unabashedly bullish. "This is the toughest call to make," says Wai Lee, chief investment officer and director of research for the quantitative investment group at Neuberger Berman. The greenback, he says with a grimace, "is bouncing back and forth. We are taking a very, very cautious stance." That wariness is something that financial advisors may want to heed.

To be sure, advisors don't rely on a few months' worth of trading data, particularly in a volatile currency market. In addition, their clients are likely to have all but a fraction of their assets invested in dollar-denominated assets. Yet even those who have no non-dollar liabilities-no plans to retire outside the United States, no heirs living outside the country and no holiday home in Ireland-can't afford to ignore the dollar's fortunes.

The United States doesn't have to undergo a fiscal and currency crisis such as those that devastated Greece and Ireland in the last year in order for a shift in the value of the dollar to jolt investors' holdings, experts agree. As John Derrick, director of research for U.S. Global Investors, a mutual fund management firm, points out, "If the dollar falls-rapidly or slowly, short term or long term-that is going to cause the number of dollars I need to spend to get any imported consumer good to rise."

The near-term concern is Federal Reserve Chairman Ben Bernanke's second round of quantitative easing, also known as QE2. "The only way QE2 will work in the United States is by pushing down the value of the dollar," says Richard Cookson, chief investment officer of Citi Private Bank in New York. But long after the shoving and pushing in the currency markets around the size and timing of the Fed's policy have passed into history, concern about the dollar remains.

Tony Roth, New York-based head of investment strategy and wealth planning for UBS Wealth Management, points to the decline in the percentage of global GDP generated by the United States economy. Sitting at 20% today, UBS strategists expect that number to decline to a mere 10% within the next dozen years.

"We are at or approaching a historic inflection point, where the balance of power shifts decisively from the United States and the developed world-I'd call it almost the 'overdeveloped' world-to emerging nations," Roth argues. As those nations, such as Brazil, China and India, generate a greater share of global GDP and develop domestic markets as well as exporting their products, a similar shift in the balance of power will follow.

The beneficiaries of the shift, says S. Mackintosh Pulsifer, chief investment officer of Fiduciary Trust Co., will "deserve a spot at the currency table, and in time they will take it." Within 25 years, Pulsifer predicts, major commodities like crude oil and copper-today traded in dollars around the world and thus helping to ensure that the greenback remains the global currency of choice-will be purchased and sold in multiple currencies. "That will mean less use of dollars and less demand for dollars," adds Pulsifer, who helps some of the country's most affluent families manage multigenerational pools of wealth.

GOLD AND COMMODITIES

The combination of headlines about the dollar's plunge in value during the summer of 2010 and the potential impact of QE2 with these longer-term trends is attracting the attention of many financial planners. Even though few of them expect to witness the kind of cataclysmic event that could wreak havoc on dollar-denominated assets, they are nonetheless thinking ahead to a world in which the dollar is no longer all powerful.

"From an investment standpoint, you simply can't afford to be a saver any more," says William Larkin, portfolio manager at Cabot Money Management, a Salem, Mass.-based firm that oversees some $500 million in assets for high-net-worth clients. Instead of savings accounts, he is steering his clients into some form of gold-related investment.