Tuesday, April 23, 2019

Marc Faber : The Dollar should weaken in due course

Mike Gleason: Despite what the Fed has been doing, we are still seeing a strong dollar because the Fed has been a bit more hawkish than the ECB and the BOJ - the Bank of Japan - and other major central banks throughout the world. Do you see this reversing at some point? We know Trump doesn't want a strong dollar, so how do you see things playing out in the currency markets? Because for the most part, gold, if we relate it to gold, is going to trade off the U.S. dollar in many respects. As long we see strength in the dollar, it's likely going to be difficult for gold to really catch fire. Give us your comments on the dollar and what you see ahead for the greenback.

Dr. Marc Faber: Well, I think the dollar is strong because many investors argue that the economy in the U.S. is either better conditioned than European economies. Who knows? But one reason the dollar has been strong is you have all these negative interest rates in Europe. In Germany the 10-year yield is now negative, and in Japan as well, in Switzerland as well. And in Spain you have interest rates on the 10-year government bonds of 1%, whereas in the U.S. it's 2.58%. So, I could argue it's logical that if you get more than twice as much interest in U.S. Treasuries than in Spanish bonds, and you're an insurance company in Europe, or sovereign fund in the world, you rather buy U.S. Treasuries than Spanish bonds. I think it's quite logical. So, I think that has supported the dollar.

But I personally, I think the dollar should in due course weaken, and as the dollar weakens it could also trigger weakness in the stock market.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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