Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

3rd Quarter | 2021

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

Gold moved up toward the top of its current trading range last week, building support within the current bull market. It closed the week at $1,753 per ounce (see the following chart).

In last week’s article, we looked at the historical inverse relationship between the price of gold and the strength of the U.S. dollar. This relationship may be especially important to consider now as analysts forecast a steep decline in the dollar.

According to CNBC, “Stephen Roach, one of the world’s leading authorities on Asia, is worried a changing global landscape paired with a massive U.S. budget deficit will spark a dollar crash.

“‘The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,’ the former Morgan Stanley Asia chairman told CNBC’s “Trading Nation.” … ‘The dollar is going to fall very, very sharply.’

“His forecast calls for a 35% drop against other major currencies.”

If this comes about in the next few years, it could provide a significant boost for gold priced in U.S. dollars.

Rick Andrews is president of Avant Capital Management.



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