United States
The latest round of earnings calls from the systemically important banks was encouraging on balance. Households are still flush and still spending and consumer and business delinquencies remain remarkably low. Though a recession is surely coming, it doesn’t seem to be lurking just around the corner.
In this week’s report, we look at the current de-dollarization discussion within the context of the USD’s near-term cyclical outlook, and whether it warrants a bullish or bearish stance.
We are increasing our gold price target to $2,200/oz, given the increasing risk of fiscal dominance in the US, rising geopolitical risk, the return of trading blocs and currency debasement risk. These risks also will increase economic uncertainty, which also will be bullish for gold.
The dollar has entered a structural bear market. Although the greenback could get a temporary reprieve during the next recession, investors should position for a weaker dollar over the long haul.
