Everyone wants a create content on TikTok account, generating an instant fortune but reality is a harder truth. Elsewhere, making a prediction on anything that moves in our show business is easy but in reality, the forces that drive financial market behavior are unpredictable and relationships between assets are fluid.
The algorithms are selling because they want to make a quick profit in seconds. The hedge funds are selling because they have to. Our neighbors are selling because they always believe the world is going to end tomorrow.
Excessive investment claims with colorful charts are often made by those (I’m certainly not one of them) who have something to sell desperately. The more time you spend observing markets, the more you learn to expect the unexpected.
Few “assets” confuse and confound the average investor as much as dollar and gold. If I had told you a couple of years ago that the US deficit was going to explode and the US government was on an unsustainable debt path plus rising yields and inflation on the planet, you probably would have guessed that would have been very bad for the US dollar and gold was destined to double or triple in value.
We get what the markets offer. So what actually happened and what have you learned? A dollar which has not collapsed yet and all that glitters is not gold. You can google for the numbers. Of course, some gurus are still sticking with their same predictions despite having been wrong-footed for years in their work. Come on, at least gold is shiny and nice to look at.
There have been good times and bad times, thrills and spills over the decades for the greenback. What is interesting is the dollar isn’t all that “bad” that even my young daughter understands it. My long-term bullish view on the US dollar has served my investors well over the years especially from the local currency perspective.
Back in early 2021, I was looking to nail my medium-term target at 4.50 on USD/MYR and there was almost no good news about the greenback floating through the airwaves during that time. Yeah, I know I got you all excited now. Markets are full of surprises if you care to look at the prices today.
Most people are convinced that the end of the Fed’s rate-hiking cycle signals a lower dollar and higher gold in the coming year or so. In my view, a “lower” dollar will continue to trade sideways with pockets of strength against some currencies on my radar. Watch out for surprises!
I’m still jealous of the dollar’s status as a “safe haven” during periods of economic and political uncertainty. Gold will move higher within a narrow corridor and don’t expect any fireworks. Indeed, anyone who has invested in gold for a very long time will likely agree with me that the yellow metal is not going to USD5,000 soon. With the war premium rising due to a potential escalation in the Middle Eastern conflict, higher price volatility is inevitable.