Goldman Sachs predicts Dollar reserve status at risk

[Pauls' Revere]

https://finance.yahoo.com/m/efc5b7af...has-a-new.html

New York investment bank Goldman Sachs is raising its price target for gold while sounding the alarm about risks to the U.S. dollar.

In a note to clients Tuesday, the bank reaffirmed its position of gold being "the currency of last resort" amid uncertain economic conditions, raising its price target for gold to $2,300 per ounce after a surge to record levels earlier this week.

The bank tied the metal's rally to a "potential shift in the U.S. Fed towards an inflationary bias against a backdrop of rising geopolitical tensions, elevated U.S. domestic political and social uncertainty and a second wave of Covid-19 related infection."

"Combined with a record level of debt accumulation by the U.S. government, real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge," the note explained.

The current macro environment could impact the dollar's status as the world's reserve currency, according to Goldman. Indeed, the bank said that debasement risk is growing as a result of the mounting debt built up by policy makers seeking to combat the economic impact of Covid-19. The combination of debasement risk and piling debt "sows the seeds for future inflationary risk."

"Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows," the bank said. "With more downside expected in U.S. real interest rates, we are once again reiterating our long gold recommendation from March."

Year-to-date, gold has gained more than 27% and is currently trading near $1,940 an ounce.

[devil21]

CFR is calling for it openly also. Not that those of us that have followed this for years are surprised but the rubber is meeting the road now.

It Is Time To Abandon Dollar Hegemony
https://www.foreignaffairs.com/artic...ollar-hegemony

[Pauls' Revere]

CFR is calling for it openly also. Not that those of us that have followed this for years are surprised but the rubber is meeting the road now.

It Is Time To Abandon Dollar Hegemoney
https://www.foreignaffairs.com/artic...ollar-hegemony

+ rep

[oyarde]

Gold 1970 and on the way up , 2k , then 2100

[Krugminator2]

Wouldn't be stunned to see a rally in the dollar on all of the doomer sentiment. And the new highs in gold seem a little too obvious. Wouldn't be surprised if this breakout is really messy or fails.

[r3volution 3.0]

What's important is that:

-today's monetary policy is much more radical than last time's

-there is clearly no chance that it will be reversed

-the average investor is starting to realize that there's no chance it will be reversed

-and we're starting this bull market at the high of the previous

As far as I'm concerned, gold 4000 is a highly conservative bet.

Silver 50 is virtually certain (that's just assuming gold stays around 2000).

[Bern]

CFR is calling for it openly also. ...

Well F me. Thanks for the link. Can't give you rep again, but I do appreciate it.

[r3volution 3.0]

At the risk of bullet-point exhaustion, here are some things to watch as to the status of the USD as reserve currency:

-gold price in USD (higher = problems for USD)

-foreign holdings of US assets per TIC reports (lower = problems)

-USD forex rates with major US trade partners, especially those with whom the US has trade deficits (lower = problems)

-spread between real treasury rates and real bund/JGB rates (lower = problems)

-rate of M2 increase in US less rate of M2 increase in EMU/Japan (higher = problems)

-US less Chinese share of Saudi oil purchases (lower = problems)

-value of outstanding eurobonds or similar (higher = problem)

-China, percentage of energy imported by sea (lower = problems)

[devil21]

Well F me. Thanks for the link. Can't give you rep again, but I do appreciate it.

No problem. And it's not a one-off op/ed piece either. The authors are on the deep inside. Chatham House=Royal Institute of International Affairs, aka the CFR's parent in the City of London.