U.S. Dollar to Lose Stature in Global Race to Devalue
Last Monday, the Treasury Department labeled China a “currency manipulator” for depressing the yuan’s exchange rate. It isn’t clear whether that designation will have anything more than a symbolic effect.
But the broader escalation of tensions around trade – and the open talk by President Donald Trump of pursuing a weaker U.S. dollar – are making investors nervous. Some are seeking real value provided by gold and silver.
A recent JP Morgan report concludes that precious metals will continue to gain strength over time as the U.S. dollar’s role in international trade steadily diminishes.
“In the coming decades we think the world economy will transition from the U.S. and U.S. dollar dominance toward a system where Asia wields greater power,” JP Morgan analysts say. They forecast that the U.S. dollar “will likely lose value compared to a basket of other currencies, including precious commodities like gold.”
In a global race to devalue, hard money should ultimately gain in terms of all major fiat currencies.