Hey all - I've been watching the gold/dollar markets recently and have gotten pretty worried about what the market is implying about the future of the US (relative to other parts of the global economy).
As I'm sure you know, precious metals like gold and silver have been on an absolute tear recently. The dollar, meanwhile, has weakened from April levels and fallen dramatically from its peak in mid-March. Market implied 10/5 year inflation has recovered since March, but remains below pre-COVID levels.
From preliminary readings, it seems as though while Europe’s economy took a bigger hit than the US early on in the pandemic due to draconian lockdown measures, they are recovering stronger now since they have done a better job reducing cases. Ditto for Asia.
I wanted to get your thoughts on all of this. Personally, putting all of this together makes me quite concerned for the future of the US economy. The Fed is printing an unprecedented amount of money and is effectively subsidizing similarly unprecedented fiscal stimulus. Some counters to this are that everyone else is also creating a lot of money and that the Dollar is the reserve currency which gives the US some leeway (but for how long?). Are we printing ourselves into a Japan-esque stagnation? Is inflation or deflation in the near term and long term more likely (gold rising and dollar depreciation appear to be inflationary signals). At the end of the day, how much do these trends actually matter (in terms of real quality of life relative to the rest of the world) for various socioeconomic and age demographics in the US? What is the best way to hedge against the most likely scenario (invest in stocks? Invest in TIPS? Invest in gold? Real estate/hard assets?)?
I have never been bearish on the United States, but the historical nature of empires is to rise and fall. The current situation makes me quite concerned (maybe needlessly, in terms of real quality of life impact?) for the future. With that said, if possible, I wanted to get your thoughts on all of this (to either confirm my fears or allay them).
Sincerely, A concerned undergrad.
One of many articles discussing some of the market dynamics I mentioned: https://www.wsj.com/articles/gold-prices-hit-reco…
Interesting new book by Ray Dalio (I have not read it yet) that discusses some of these concerns: https://www.principles.com/the-changing-world-ord…
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