Confidence in the US dollar has waxed and waned for months. The government’s massive fiscal response to the nation’s economic woes continues to weigh on the dollar, though its established position as the world’s reserve currency and the global economic slowdown have offset this weakness thus far–in many respects the greenback is still the best option available.

But the Chinese have been saber-rattling for changes to the international monetary system, advocating that the US dollar forfeit its reserve currency status in favor of what it regards as a more equitable basket approach. And China isn’t alone in that belief. In recent months several countries have elected to conduct business in local currencies. Even some American economists argue for currency baskets.

Rest assured if the Federal Reserve loses the fight to maintain at least nominal independence from our government’s political arms, the dollar will face extreme pressure. But even if the US dollar remains the world’s reserve currency and the Fed is able to maintain the status quo, the dollar will encounter significant headwinds.

Despite assurances from the Federal Reserve that it will take steps to soak up excess liquidity when the time is right, that involves raising interest rates and pulling money out of the economy–a politically fraught move in the best of times. If the Federal Reserve’s timing isn’t perfect–and it rarely is–these efforts could thwart a nascent recovery or foster inflation. And with Chairman Ben Bernanke’s term expiring in January, I expect him to err on the side of inflation.

That won’t create scenarios as dire as the Weimar Republic in the 1920s or Zimbabwe today, but a weaker US dollar will pose a significant challenge for investors in the coming years.

There are a variety of ways to hedge your portfolio against a weak dollar, ranging from the extremely conservative to the extremely aggressive; the best approach depends on your portfolio’s makeup and your unique risk tolerance. The table “Seven Hedges for Weak Dollars” lists our ideas from lowest to highest risk.

Gold is the most conservative way to gird a portfolio against a falling dollar. The yellow metal is a traditional hedge against inflation whose merits require little explanation. SPDR Gold Shares (NYSE: GLD), a bullion exchange-traded fund, is one of the cheapest ways to gain gold exposure.

Another method is to hold shares in US-based companies that generate substantial portions of their revenues overseas; strong international currencies will bolster earnings, and investors avoid political and some economic risks.

T. Rowe Price Global Stock (PRGSX) takes a blended approach to that strategy, investing almost half of its assets in US-based companies and the remainder in foreign operators. That combination of domestic and international investment helps to dampen volatility, especially because the fund doesn’t hedge its currency exposure.

Direct investment in foreign markets is a slightly riskier proposition. International bond funds are ideal. T. Rowe Price International Bond (RPIBX), which we’ve profiled several times in these pages, invests directly in foreign bonds but makes little effort to hedge out currency effects; despite the higher degree of implied safety that bonds offer, such an investment is risky because nothing shields it from a rising dollar. But with no sales loads or 12b-1 fees and a current yield over 3 percent, investors are well compensated for the additional risk.

Commodities also tend to perform well when the dollar weakens because investors bid up the prices. Although many view commodities as a high-risk play because of price volatility, they fall at the higher end of the moderate- risk range for us because they should be part of any well-constructed portfolio.

PowerShares DB Commodity Index Tracking Fund (NYSE: DBC) tracks an underlying index of six heavily traded commodities: crude, heating oil, corn, wheat, gold and aluminum. That diversity mitigates hiccups in any individual segment and makes the fund a one-stop shop for commodity investment. Not surprisingly, the fund’s pricing demonstrates a strong inverse relationship to the dollar’s movements.

The surest way to hedge against the US dollar is through direct exposure to foreign currencies, but be forewarned that such an approach entails significant risk: Currency values can shift on a dime.

Merk Hard Currency (MERKX) invests in gold and currencies backed by solid monetary policy. As of June 30, almost half the portfolio’s holdings were European currencies; the Japanese yen and Australian and New Zealand dollars accounted for 23 percent of investable assets; and investments in the Canadian dollar represented 14 percent of the portfolio. The fund allocates the remainder of investable assets to SPDR Gold Shares.

The fund thrives when the dollar dives; in 2007 it returned over 15 percent. The currency fund is the most expensive hedge on our list–its expense ratio is 1.3 percent–but it also has the greatest risk and the highest potential returns.