Americans saw one of the most dramatic stock market crashes earlier this year. In four trading days, the Dow Jones plunged 6,400 points, a near 26% decline. One of the fastest declines on record, from merely this March.
These are stressful and frantic times, to say the least.
Some analysts believe it is far from over. In fact, Goldman Sachs has been advising their clients to dump the dollar due to two factors: a possible win by Democrat candidate Joe Biden in the presidential election, and the development of a successful COVID vaccine.
Although uncertainty is still centered around either outcome, they believe Biden’s lead in the polls over Trump and signs of progress on a vaccine are skewed towards dollar weakness.
Goldman Sachs strategist, Zach Pandl states, “In our view, a ‘blue wave’ U.S. election and favorable news on the vaccine timeline could return the trade-weighted Dollar and DXY index to their 2018 lows.”
Let alone that without a vaccine right now, fears are growing more serious that COVID will return with a vengeance come this winter.
It’s scary to think that a massive 26% drop in the DOW, is just the beginning of what our hard-earned dollars may experience.
Goldman Sachs suggests a few things.
- They recommend shorting the US dollar against other currencies like the South African rand, the euro, and others.
- Secondly, they suggest buying silver.
Biden’s plan to install 500 million solar panels in the US within the next five years could support a rise of 15% in global solar installations.
Here’s a silver lining.
Mikhail Sprogis, an analyst at Goldman Sachs, confirmed silver as a buy as it was an “obvious beneficiary” from a global move toward solar energy. Currently, solar investments comprise about 18% of silver’s industrial demand.
“While an acceleration in the trend of solar installations is clearly bullish, demand for silver as a safe-haven metal and to diversify from gold remains essential for a sustained bull market,” Sprogis said.
The bank’s equity analysts believe that at minimum, the global solar installations will rise by 50% between now and 2023. They estimate that overall, solar will boost the silver industrial demand by 2% over the next three years, or by 9% in a bull case.
It seems as though silver may not “just” be one of the best hedges against the dollar, but also an asset you can turn to in a grim and declining market.