Contact us
CALL US NOW 1-888-GOLD-160

Even the Mainstream Is Getting Bearish on the Dollar

  by    0   1

Peter Schiff has been warning about a dollar collapse for years. Now we’re starting to see some mainstream bearishness on the greenback.

The dollar hit a more than 2-year low on Monday and closed out August with its fourth straight monthly loss. It was the worst August in five years for the dollar and the longest run of monthly losses since the summer of 2017. The dollar is down about 11% from its 2020 peak.

In response to the economic shutdowns imposed by governments to deal with the coronavirus pandemic, the Federal Reserve is printing money to infinity and beyond.  On top of that, it has shifted its inflation targeting to allow inflation to run hot meaning there is no end in sight to the currency debasement. The announced change in inflation targeting last week pushed the dollar still lower.

A Commerzbank analyst told Reuters this is “not good news for the dollar.”

If one expects the domestic purchasing power of the dollar to be eroded more quickly (as that is what inflation is) it is difficult to assume that it will maintain its purchasing power on the FX market in the long run.”

During his speech at the Money Show last month, Peter Schiff said the government is trying to replace the economy with a money printing press and he warned that a dollar crisis is looming.

The dollar is going to fall through the floor and inflation is going to ravish the United States. What’s about to happen is that the world is going to go off the dollar standard and go back to the gold standard. That is where we are headed.”

You seldom hear that kind of warning from the mainstream, but we are beginning to see some significant bearish sentiment about the dollar’s future.

Ulf Lindahl serves as chief investment officer of currency manager A.G. Bisset. He told Reuters he believes the dollar will plunge 36% against the euro in the next year. He said recent dollar weakness “is the beginning of a very large move” that could hurt the droves of investors exposed to it through their holdings in US stocks and bonds.

Meanwhile, hedge fund bets against the greenback are at the highest level in a decade, according to data from the Commodity Futures Trading Commission. And a recent Bank of America Global Research survey found that 36% of fund managers said shorting the dollar was their top currency trade for the second half of 2020.

According to Reuters, “most bearish investors expect the dollar to depreciate on the back of stronger economic growth prospects outside the United States, rock-bottom US interest rates, and concerns that programs to allay the coronavirus pandemic’s economic fallout are inflating fiscal deficits.”

None of this will change anytime soon. With the Fed’s pivot to “average inflation” targeting, interest rates will almost certainly stay at zero for years. Meanwhile, the US government continues to borrow and spend at a torrid pace.

Other big mainstream players are also bearish on the dollar. Goldman Sachs says an improving global economy and negative real interest rates in the US are a “sustained recipe for dollar weakness.” TD Securities said the Federal Reserve’s revamped policy approach to inflation will keep the dollar under pressure and estimated the dollar is about 10% overvalued even in its weakened state.

There is even some speculation that the dollar’s status as a reserve currency could be in jeopardy. Goldman Sachs warned about this possibility last month and Wells Fargo said the big gold bull run reveals a “lack of trust” in the monetary system. Michael Gayed, portfolio manager at Toroso Investments/ATAC Rotation Fund told Reuters, “There’s a lot of speculation these days that the dollar will crash and lose its prominence as the global reserve currency.”

On a podcast last month, Peter Schiff noted that the US dollar has lost better than 99% of its original value since the founding of the country, mostly thanks to the Federal Reserve. The price of gold in dollars was relatively stable before the central bank came along.

It’s been collapsing more recently, particularly ever since we went off the gold standard in 1971, and I think it’s about to collapse completely in the coming years, if we even have years. It may even be months. I mean, who knows at this point? I think we literally are living on borrowed time. This is a game of musical chairs and the music could stop at any minute. And if you are not in a chair, meaning out of US dollars, then you are out of this game for good.”


Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

The World’s Top 10 Gold Producers in 2020

Who produces the world’s gold? Gold production fell again in 2020. According to the World Gold Council, gold production came in at 3,478 tons last year. That compares with mine output of 3,597 tons in 2019.


Fed Chair Jerome Powell Sticks to Dovish Script During Congressional Testimony

Federal Reserve Chairman Jerome Powell testified before Congress on Tuesday and continued to peddle the “transitory” inflation narrative. Keeping with the dovish tone set after last week’s FOMC meeting, Powell reiterated that the central bank is not going to rush to raise interest rates, and he said the Fed would not hike rates merely in […]


More Government Debt Means Less Economic Growth

The US government continues to borrow money at a frenetic pace in order to cover its massive spending spree. It runs huge deficits month after month and there is more spending coming down the pike. The national debt is over $28 trillion and it is about to begin surging upward again. But with the exception […]


Another Inflation Warning: Import-Export Prices Rise Faster Than Expected

In another sign of rapidly accelerating price inflation, import-export prices rose much faster than expected in May. Import prices were up 1.1% month-on-month in May, and the Labor Department revised April’s increase from 0.7% to 0.8%. Projections for May were for a 0.7% increase. The actual number was higher than the high end of estimates.


Despite Tax Day the Federal Government Runs Another Massive Deficit in May

Typically, the US government runs a budget surplus in the month that tax returns come due. Not this year. Despite a surge in receipts, the federal government ran a $131.95 billion deficit in May, continuing the trend of overspending and ballooning budget shortfalls. The federal budget deficit for fiscal 2021 now stands at $2.06 trillion […]


Comments are closed.

Call Now