Dollar slides and pushes commodities
The US House has just approved the fiscal stimulus package of $2,000 per person and there is already talk of a new fiscal stimulus in January 2021. In parallel, the Fed through its Governor Jerome Powell reiterated its expansionary policy which will remain so until current functional unemployment is reabsorbed and inflation returns well above 2% for some time.
The inflationary effect of fiscal policy combined with the reduction in T-bond yields due to the expansion of the FED balance sheet enhances the role of precious metals, primarily gold but also silver and platinum, as inflation insurers, a key role for American investors.
Non-Americans also find it convenient to invest in commodities as these are cheaper due to the devaluation of the dollar against their respective national currencies. This is especially true for the Euro, which in recent days has reached 1.23 to the dollar, the highest level since April 2018.
For the first half of 2021 we therefore expect a further weakening of the dollar against the rest of the world but also increasing difficulties for exports from the Eurozone.
Hetica Capital Research Centre