The global storm is rising again! Investors are pessimistic about the US economy
Global turmoil has once again emerged! Investors from all walks of life are bearish on the U.S. economy, thereby driving the price of gold to new heights. So, just how high and how long can the price of gold continue to rise? Today, I will delve into this from three aspects: international situation, the U.S. economy, and the hegemony of the U.S. dollar.
The unexpected surprise that was expected has occurred again, and that is the unfortunate incident involving the President of Iran. This has further stimulated everyone's demand for risk avoidance, thereby pushing up the price of gold.
According to data, the current spot gold price has reached a record high of $2,440.61 per ounce. Truly, there is no highest, only higher! Some experts have indicated that there is still room for the price of gold to rise in the future. So, what is the real truth behind this?
First, let's start by looking at the international economic situation.
As the saying goes, "In troubled times, gold; in prosperous times, antiques." It is clear that gold is now more than just an investment; it is closely linked to the U.S. economy and the international situation.
Looking at the international economic situation, the Russia-Ukraine conflict, the Israel-Palestine conflict, and the Israel-Iran conflict are all factors contributing to the instability of the international economy. The cause of these factors is the principle of U.S. interests first. It can be said that the instability of the global economy is orchestrated by the United States. Precisely because of this, we can more clearly see that the U.S. economy is indeed in a dire state at present.
Take Iran, for example; the current incident there will inevitably lead to unstable oil production, which in turn will drive up international oil prices. Although Saudi Arabia and Iran are at odds, from a global economic perspective, they are both major oil-producing countries and are also members of OPEC. Therefore, they are still bound together like fleas on a rope.
So, will today's Iran be tomorrow's Saudi Arabia? I believe that Saudi Arabia will also change its thinking to some extent at this time! Under such circumstances, whether Saudi Arabia will cooperate with the U.S. to increase oil production is really uncertain. Moreover, this will add more uncertainty to the historic cooperation between the U.S. and Saudi Arabia.So, in the medium term, the U.S. economy is indeed in a dire state, which in turn makes the global economy highly uncertain, providing strong support for the future price trend of gold.
Secondly, let's look at the U.S. economy from within.
Currently, the U.S. is not only creating chaos globally but also accelerating the reaping of global wealth. Essentially, if the U.S. is not meeting its expectations in terms of harvesting, it will not easily opt for a rate cut. However, a very realistic issue is that due to the U.S. maintaining high interest rates for the dollar, the scale of U.S. debt has been further increased, now reaching nearly $35 trillion, increasing the risk of a U.S. debt crisis.
Furthermore, because of the strong U.S. dollar index, countries around the world are now selling U.S. debt to save their foreign exchange markets; where is there any money left to buy new U.S. debt that the U.S. continues to issue?
To put it bluntly, the U.S. interest rate hike is a gamble by the U.S. with the whole world, a race to see whether the speed of its own implosion is faster or the speed of reaping global wealth is faster. Now, the Federal Reserve has hinted that the U.S. dollar rate cut may not be based on the inflation index.
So, looking at the short-term economic situation in the U.S., it seems unlikely that the U.S. can persist in its current path of not cutting rates. Major investment institutions are now predicting that the U.S. dollar will cut rates in September this year. The increasing anticipation of a rate cut by the Federal Reserve within the year will also lead to continuous new highs in gold prices.
Lastly, let's consider the status of the U.S. dollar's hegemony.
As the U.S. engages in unscrupulous profit-taking, the world is now moving towards de-dollarization and hoarding gold, which poses a certain impact on the hegemony of the U.S. dollar.Furthermore, the reason why the US dollar has been able to dominate globally is that it is closely tied to the oil from the Middle East and Russia, as well as to the goods from China, thus forming a closed loop in global finance.
It can be said that the hegemony of the US dollar is now entirely based on America's high technology and advanced military equipment, having completely departed from its proper monetary attributes. Under such conditions, the path towards de-dollarization globally is irreversible, and the dollar hegemony has lost its foundation.
Now, there are experts who suggest that the US dollar will become a second-tier currency in the future, that is, a regional currency.
If we look even further into the future, the world will either give birth to a new global currency, such as digital currencies, etc.; or more countries will complete trade settlements through their own currencies. And in order to establish their credit foundation, these currencies will more often use gold as an anchor.
Therefore, in the long term, the decline of the US dollar hegemony will also push up the future price of gold.
However, we must also keep in mind that the price of gold has already significantly deviated from its value. This means that there is a certain bubble in the gold price, and once the global economy stabilizes, the price of gold will quickly return to a reasonable range.
So, we ordinary people should act within our means and not blindly follow the trend. What do you think?