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Project Syndicate/Mohamed A. El-Erian/8-11-2020
“Both of these (partly true) consensus narratives imply further significant dollar depreciation. While the immediate effects are theoretically positive, the practical situation is likely to be different, because so much economic activity is currently impaired by government restrictions and the reluctance of individuals and companies to return to previous consumption and production patterns. Around half of US states have now reversed or halted the process of economic re-opening.”
USAGOLD note: Upon reaching the conclusion of this article, you might conclude, as we did, that the most likely outcome for the dollar is more of the same – up and down in fits and starts with a general depreciation of most currencies, including the greenback, against goods and services. This past week’s readings for both wholesale (+.6%) and retail (+.6%) inflation will be taken in some quarters as a hint of what’s to come. For his part, El-Erian, as posted yesterday (please scroll), says that gold has evolved into a “must-have” asset – not just among institutional investors but for “everyone.”
Chart courtesy of TradingView.com • • • Click to enlarge