Today the top trends forecaster in the world predicted that as investors across the globe continue to dump dollars, the price of gold will soar.
Dumping US Dollars Bullish For Gold
November 29 (King World News) – Gerald Celente: Investors are selling dollars at the fastest clip in the past 12 months on the belief that the U.S. Federal Reserve has stopped raising interest rates and will begin cutting them next year, the Financial Times reported.
As U.S. interest rates were rising over the past 16 months, dollar-denominated investments were outperforming most of the world’s other opportunities. This year by late September, the dollar had gained 19 percent against other major world currencies.
Now the dollar has reversed course…
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If rates rise no further, and especially if rates decline, other investment venues become more attractive by contrast.
Asset managers are on trend to unload 1.6 percent of their dollar positions this month, the largest net outflow since November 2022, according to State Street, teeing up the dollar for its worst monthly performance in a year.
In November 2022, a similar dollar dump dropped the currency’s value 10 percent by the following February.
The current sell-off may signal a longer-term trend in which asset managers cut back their holdings in a variety of dollar investments, analysts told the FT.
Asset managers are still overly weighted in dollars compared to other currencies, indicating the buck may have further to fall, Michael Metcalf, chief macro strategist at State Street, said to the FT.
Japan is among those celebrating the dollar’s decline. The yen has surrendered 12 percent of its value against the dollar this year as the central bank has held to negative interest rates. This month, the yen regained about 1.5 percent of its lost value because the dollar is sliding…
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Emerging markets also welcome a weaker dollar. Floundering in dollar-denominated debt, poor countries will find it at least slightly easier to service foreign debt. Some of those economies could even see investors return after foreign money fled over the past three years.
The MSCI index of emerging market stocks has managed a gain of 3 percent so far this year.
TREND FORECAST: Key Gold Bull Catalyst
A weaker dollar will make U.S. exports cheaper in other countries, boosting the nation’s manufacturing sector—though perhaps not by much. And it is really no big deal, because manufacturing accounts for less than 11 percent of U.S. GDP. Europe is entering a recession, China’s economy is still finding its footing, the world’s consumers are tightening their belts, and companies and countries are reshoring or “friendshoring” their supply lines.
Also, as the dollar weakens, imports to the U.S. become more expensive. American consumers already have little wiggle room left for discretionary purchases so higher prices for foreign-made goods will cut sales of those items even more.
Since gold is dollar based, the lower the dollar falls, the cheaper it will be for nations to buy gold which will in turn drive up gold prices.
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