Goldman Sachs: Dump Dollars, Buy Silver
The comments below are an edited and abridged synopsis of an article by SchiffGold.com
Sell dollars and buy silver: That’s Goldman Sachs’s recommendation. Peter Schiff has been warning about a dollar collapse, and now even the mainstream is getting bearish on the US dollar.
In response to Covid-19 economic shutdowns, the Fed is printing money to infinity. It is allowing inflation to run hot, meaning there is no end in sight to the currency debasement. This is bearish for the dollar, and an article last month (Reuters) quoted a number of mainstream analysts talking about dollar woes.
Goldman sees broad-based dollar weakness and recommended shorting the greenback against the Mexican peso, South African rand and Indian rupee. They advise buying the euro, along with Canadian and Australian dollars.
In August, Schiff said the government was trying to replace the economy with a money printing press, and he warned that a dollar crisis loomed. Dollar weakness is bullish for both gold and silver.
Goldman analyst Mikhail Sprogis said recommended buying silver. He said the white metal is ‘an obvious beneficiary’ of the global move toward solar energy.
Silver is vital to the solar energy sector, and solar power generation is expected to nearly double by 2025. It is coming off its best quarter since 2010, and the fundamentals indicate there is still plenty of upside.
The silver:gold ratio remains high, indicating that silver is still historically undervalued compared to gold.
Mine output fell with the Covid-19 economic lockdown, and the Silver Institute expects mine supply to continue its 4-year slide. The institute projects a 7% decline in mine output this year. Global mine production fell by 1.3% in 2019.
The biggest driver for precious metals continues to be US monetary policy. In order to be bearish on gold and silver, you have to believe the Fed will tighten monetary policy and the dollar will remain strong. Both of these prospects seem pretty implausible. Even the mainstream is starting to see it.