A new, foolproof vaccine would definitely be a good thing, right? Well, at least that’s how the majority of the population would see it.
In a year as wild as 2020, even the slightest bit of “good” news would be something expected to lift our spirits.
However, the one main thing that may suffer most from a valid COVID-19 vaccine is the very thing that our economy operates off of- the United States dollar.
In fact, according to Citigroup Inc., 2021 could be the worst year that the dollar has in decades.
Citigroup Inc. has projected the value of the US dollar to decrease some 20% in 2021 alone, but only if a COVID-19 vaccine “becomes widely distributed and helps to revive global trade and economic growth.”
Did you know, the single largest drop the dollar saw in value was in 1985 when it fell by 18.5%.
You would think that being the first country to release a proven vaccine to the world would be nothing but positive for Americans.
Experts have pointed out an underlying truth that since our dollar has performed so poorly, the rest of the world has lost faith in its short-term performance.
They expect the dollar to suffer as the Fed remains less worried about inflation while the rest of the world is likely to grow at a faster pace. Investors will more than likely rotate out of US assets and into international assets.
Although the 2020 presidential election brought controversy along with it, Citigroup does not believe it to be the primary catalyst to the dollar’s potential bear market in-store.
For these reasons, and many others is why US and global investors have been preparing for what they believe will be “another” breakout year for gold in 2021. Gold has always acted as a safe-haven in times of uncertainty and doubt.
This year, when nearly every other asset was on a sharp decline due to COVID’s outbreak, gold prices were soaring, sometimes seeing 20%+ year to date gains at some point, and it even broke past its historic all-time high price.
With inflation on the rise, a US dollar that is projected to see a weakening of up to 20%, emerging markets rebounding, and countries like India and China pursuing gold, Goldman Sachs believe that 2021 could be the year that gold sees prices of up to $2,300. Once again, surpassing its all-time high set in 2020 by nearly 15%.