The dollar remains the most popular asset in the world after gold

  • And
  • +A

Starting from April, the dollar strengthened against the currencies and commodities. This situation is a consequence of the policy stimulus announced by trump. And, perhaps, the strengthening of the currency caused by the fed increasing the discount rate twice already this year and waiting another two increases before the end of 2018. At least previously it has always led to increased demand for the dollar.
In any case, a strong dollar does not allow to realize the promises trump to reduce US trade deficit and reduce the national debt, and it is vital that the leader of the White house to keep his job.
For the weakening dollar has proven to: in addition to the nearly $ 4 trillion. printed over the last 10 years dollars Federal reserve to print more new money. And D. Rickards book “the Death of money..” to reduce the U.S. debt is considering legislation to declare that the price of gold is, say, $ 7,000. ounce. Such action may seem unlikely, but they will be effective.
Most likely, in the long term we can expect dollar weakness and prepare for the purchase of assets, which will replace the dollar.
In 2017 this alternative tried to speak cryptocurrency, and instantly increased the demand confirmed-standing trend out of the dollar. But further developments showed the dampness of such alternatives, and, most likely, in the near future the alternative to the dollar may act as some already known highly liquid asset.
The first year Iran, Iraq, India, Venezuela, and not only they, due to various reasons are trying to move away from the dollar as a means of payment for goods in bilateral trade. But Russia and China are actively investing in gold to reduce their dependence on reserves denominated in U.S. dollars, and are increasing their reserves in gold at the fastest rate.
So, Russia has reduced their holdings of US debt by about four fifths and increased the share of gold in foreign exchange reserves.
It is still unclear whether the new monetary standard based on gold, but attention to the dynamics of the stock asset will give investors the prospect of prosperity in the future.
Gold prices are currently around $ 1190 per ounce. And when a just figure the cost of production in the 900-1100 $ per ounce (there are various estimates), the price of gold is currently very attractive for long-term investments for capital preservation or speculative earnings.
_______________
Vladimir Kuzovlev,
Financial analyst,
Larson&Holz