A major player in the financial world is predicting a fall for the US dollar. Jeffrey Sherman, deputy chief investment officer at DoubleLine Capital (a $92 billion asset manager), believes the dollar is overvalued and headed for a decline.
Overvaluation and Capital Flight
Sherman points to purchasing power parity and trade-weighted baskets as indicators of the dollar’s long-term overvaluation. He also cites capital flight as a significant factor contributing to this prediction. He suggests that the current economic policies are partly responsible for this trend.
A Weaker Dollar and the Appeal of Gold
Sherman also highlights the US government’s apparent preference for a weaker dollar, arguing that it helps offset the impact of certain economic policies. Interestingly, he notes the rising demand for gold, both from investors and central banks worldwide, as another sign pointing towards a weaker dollar. DoubleLine continues to recommend gold investments to its clients.
The Dollar’s Recent Performance
The US Dollar Index (DXY) has already shown some weakness. It’s down nearly 0.5% in the last month, around 5% in the last three months, and almost 9% year-to-date.
Disclaimer: This information is for general knowledge and shouldn’t be considered investment advice. Always do your own research before making any investment decisions.
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