"“Real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” wrote Goldman strategists including Daniel Sharp. “Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows.” The precious metal has rallied as real interest rates have declined Gold’s record-breaking rally highlights growing concern over the world economy. The bank raised its 12-month forecast for gold to $2300 an ounce from $2000 an ounce previously. That compares with a value of around $1930 currently. Meanwhile, the Bloomberg Dollar Spot Index is on course for its worst July in a decade. The drop comes amid renewed calls for the dollar’s demise following a game-changing rescue package from the European Union deal, which spurred the euro and will lead to jointly-issued debt. “The resulting expanded balance sheets and vast money creation spurs debasement fears,” Goldman strategists said. This creates “a greater likelihood that at some time in the future, after economic activity has normalized, there will be incentives for central banks and governments to allow inflation to drift higher to reduce the accumulated debt burden,” they said. The Fed is set to deliver its latest decision Wednesday. The bank sees U.S. real interest rates continuing to drift lower, boosting gold further."

It will be very interesting moment to see how US dollar maintains its status as an international reserve currency under huge quantitative easing. Committee for a Responsible Federal Budget (CRFB) estimates debt will grow from just under 80 percent of GDP prior to the crisis to over 100 percent of GDP by the end of Fiscal Year 2020. So, I believe US dollar will get losing its status as a reserve currency and other inflation-resistant assets (i.e. gold, silver) will keep going up since investors do not want to lose their buying power. But, one of fun facts is that the personal savings rate hit a historic 33% in April based on the U.S. Bureau of Economic Analysis and this rate — how much people save as a percentage of their disposable income — is by far the highest since the department started tracking in the 1960s. Apparently, normal people are scary and are figuring out what they need to protect their wealth from this crisis. Thanks

Gold’s record-breaking rally highlights growing concern over the world economy. Goldman raised its 12-month forecast for gold to $2300 an ounce from $2000 an ounce previously. That compares with a value of around $1950 currently. The bank sees U.S. real interest rates continuing to drift lower, boosting gold further.

With Congress closing in on another round of fiscal stimulus to shore up the pandemic-ravaged economy, and the Federal Reserve having already swelled its balance sheet by about $2.8 trillion this year, Goldman strategists cautioned that U.S. policy is triggering currency “debasement fears” that could end the dollar’s reign as the dominant force in global foreign-exchange markets.