To The Moon

Gold approaches $2800 at morning trading. The precious metal has risen 34% YTD.

Will the price of gold reach $3,000 this year?

Have you jumped in the asset? Are you bullish on gold as USD will decrease?

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Click titles to read the full analysis:

1. @Gan Eden Capital: Dollars and gold

Key Points:

At a campaign rally earlier this month, President Trump promised that if he is elected, “We will keep the US dollar as the world’s reserve currency. It is currently under major siege. Many countries are leaving the dollar.”...

Today, US dollars account for 54.8% of central bank holdings around the world. That’s still a lot, but it’s down from around 70% in the late 1990s, according to the latest IMF data.

And the US dollar is currently used for 42% of international trade, down from 52% in 2014, according to SWIFT, the Society for Worldwide Interbank Financial Telecommunication....

The dollar is still dominant, but it’s not a good trajectory....

It’s because of that, we anticipate the dollar will continue to lose share of global reserves, leading to (as I wrote above) more debt and inflation....

Over the past couple years, they have traded about $80 billion worth of excess US dollar reserves for gold, and that has driven the price of gold to an all time high.

Just imagine what will happen to the gold price if they buy another $300-400 billion...

Bear in mind central banks around the globe currently hold about $8 trillion in US dollars.

Converting just 5% of that to gold could easily make the price shoot past $10,000 an ounce.

And that may just be the beginning.

2. @Shernice軒嬣 2000: Higher Inflation if Trump Wins Presidential Election. What to expect in the financial market?

Key Points:

Higher Inflation if Trump Wins Presidential Election. What to expect in the financial market?

The market might plunge initially follow by rallies.

As discussions about de-dollarization grow, particularly among BRICS nations following their recent summit in Russia, there's a noticeable push to reduce reliance on the U.S. dollar. These countries are exploring various strategies, such as investing in gold and facilitating trade in their local currencies.

Traditionally, when Country A sells goods to Country B, the transaction often requires converting their currencies through the U.S. dollar. This means both countries have to interact with the U.S. financial system, which can be cumbersome. By establishing a system that allows for direct currency exchange between countries, they aim to bypass the dollar altogether.

If successful, this move could lead to a depreciation of the dollar. It's important to understand that a stronger dollar does not necessarily correlate with higher U.S. interest rates. Although we may see these trends appear together at times, the dollar index primarily reflects its value against other major currencies, such as the euro and the yen. Thus, a rise in the dollar could simply indicate a decline in the value of these other currencies rather than a direct connection to inflation or U.S. economic performance.

If de-dollarization proceeds, the dollar could weaken significantly. It's essential to understand that a stronger dollar does not necessarily mean higher U.S. interest rates. Although we've seen these trends align recently, the dollar index mainly reflects its value against other currencies like the euro and the yen. Thus, a rise in the dollar often indicates a decline in these other currencies rather than a direct link to inflation.

Looking ahead, if inflation does materialize, the dollar might still depreciate, particularly if there's a significant increase in money supply and ongoing efforts to move away from the dollar. As the dollar weakens, commodity prices—like oil and gold—are likely to surge. Since commodities are priced in dollars, if there’s a lot of new dollars printed, the prices of these goods could skyrocket.

This explains the recent highs in gold prices. Given this logic, if we consider the possibility of Trump being re-elected, alongside rising inflation, there could be substantial opportunities in commodity-related investments. The likelihood of these investments performing well seems quite high in this scenario.

...

Let's discuss the outlook for precious metals, particularly gold. Currently, gold is in a favorable position due to several factors.

First, there's a strong synergy of timing, market conditions, and public sentiment benefiting gold. With the trend toward de-dollarization, gold's appeal increases.

Economically, gold's value is influenced by its fixed supply, similar to Bitcoin. The supply of gold doesn't increase significantly over time, so if the dollar depreciates, the price of gold, measured in dollars, can rise even if the physical amount of gold remains unchanged.

You might argue that the dollar index is currently strong. However, this strength is largely due to the weakness of other currencies like the euro and the yen, not because the dollar itself is robust against inflation. Thus, gold remains a hedge against currency depreciation.

Moreover, as major governments engage in quantitative easing—printing more money—gold's value typically rises because its supply doesn't increase in the same way. This scenario is compounded by declining real interest rates.

Real interest rates are calculated by subtracting inflation from nominal interest rates. If nominal rates rise but inflation rises even more, real interest rates can fall, making gold more attractive. Since gold doesn’t yield interest, when real interest rates decline, investors are more likely to turn to gold.

If inflation does rise and nominal rates increase, it’s crucial to see how they affect real rates. For instance, if rates rise to 5.5% but inflation is at 6%, the real rate would still be negative, which would support gold prices.

The outlook for gold remains bullish due to a combination of currency devaluation, expansive monetary policy, and the dynamics of real interest rates. These factors suggest that gold could continue to rise as it serves as a safe haven in times of economic uncertainty.

3. @Anto X :

Key Points:

Gold Futures today exhibit a strong bullish sentiment, with prices pushing past the critical 2800 level. This breakout marks a significant move, suggesting increased investor demand and a potential shift in market sentiment towards safe-haven assets. The uptick in volume also underscores confidence among buyers, signaling that this rally may have room to grow if supported by broader economic factors.

Today’s rally has likely attracted both short-term and long-term traders, as breaking a major resistance point often leads to renewed interest. However, some volatility can be expected around this new high, as profit-taking could lead to minor pullbacks. Traders will be keen to see if Gold can hold above 2800, as this would reinforce the strength of the current uptrend.

Overall, the outlook for Gold today is optimistic, with bullish momentum likely to continue, albeit with potential fluctuations as traders adjust their positions around this key level.

Questions for you:

Will the price of gold reach $3,000 this year?

Have you jumped in the asset?

Are you bullish on gold as USD will decrease?

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⏰Duration

• 6 Nov (24pm EDT)