Could Dollar Upside Be Limited From Here?

It’s no secret that President-elect Donald Trump doesn’t mind voicing his opinion on social media. Various companies such as Boeing and L.L. Bean have already seen what commentary from the soon-to-be-President can do to stock prices.

Trump recently did an interview with the Wall Street Journal, however, in which he voiced concerns over the rise of the dollar.

The greenback moved sharply higher following Trump’s early November election victory, at one point climbing 4 percent higher at its peak after the election.

In the Friday interview with WSJ, Trump was quoted as saying that the dollar has gotten “too strong,” especially considering the fact that the Chinese yuan is “dropping like a rock. Our companies can’t compete with them now because our currency is too strong. And it’s killing us.”

Trump’s remarks regarding the dollar may be considered a little unusual, as Presidents typically don’t discuss their view on the currency in order to avoid directly influencing the market.  Trump clearly does not seem to have any issues making his opinions known.

The dollar may have been a good trade to be long given expectations for tax cuts and significant infrastructure spending. In addition, rising interest rates in the U.S. could also potentially make the greenback attractive to foreign investment.

The question is: Will the new administration be able to deliver policy of the size and scope needed to appease investors?

The answer to that question remains to be seen. With the Trump administration taking office on Friday, the clock will start ticking. Investors will likely continue to give the new administration the benefit of the doubt, although investor patience could become stretched rather quickly if progress is not seen in short order.

The concerns over a rising dollar are noteworthy. A stronger dollar can make business difficult for companies that do business overseas, and can potentially have a significant impact on corporate profits. While there may be nothing wrong with a stronger dollar if the economy is strong and the labor market is healthy and robust, an ongoing currency war is still a possibility.

Given a weaker currency’s ability to boost export growth, fuel inflation and keep debt more manageable, the U.S. has plenty of reasons to want to avoid a significantly stronger dollar.

A stagnant or weakening dollar could potentially be a catalyst for higher gold and silver prices.

If you do not currently own an allocation in physical gold, silver or other precious metals, now may be the time to consider starting one.

The dollar’s future remains up in the air, stocks have been in a bull market for nearly eight years now and inflation could potentially be on the rise. Gold and silver, on the other hand, appear to potentially be on the rise after seeing a multiyear pullback.

Physical gold and silver may potentially offer a meaningful hedge against a number of economic and geopolitical issues including declining currency values, inflation and more.

Acquiring and holding these key precious metals has never been easier than it is today. Speak with an Advantage Gold account executive today about the potential benefits of physical gold and silver ownership. Our precious metals professionals are here to answer your questions, and can even show you how easy it is to buy and hold physical precious metals using your IRA account.

Don’t wait for the next stock market crash or for gold and silver prices to rise before taking action. Explore your options for physical gold and silver ownership today. Call us at 1-800-341-8584 to get started.

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