Larry White Blog | IMF Says US Dollar Overvalued & Jim Rickards Incredibly Accurate 2017 Prediction on the Dollar | Talkmarkets
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Over 35 years experience working in oil and gas accounting with privately held oil and gas producing companies. Also have a blog that covers monetary system issues and the potential for major future monetary system change. (http://lonestarwhitehouse.blogspot.com/)  - email: ... more

IMF Says US Dollar Overvalued & Jim Rickards Incredibly Accurate 2017 Prediction on the Dollar

Date: Sunday, July 30, 2017 9:35 AM EDT

This article in Reuters quotes the IMF as saying the US dollar is "overvalued by 10 per cent to 20 per cent".  This despite the fact the US dollar index has already dropped by over 8% and now sits just above 93 at this writing. If the IMF is right, what will that mean for the dollar index and gold? Just below we do the math on it.

 

Further below, take a look at the email exchange I had in March of this year with Jim Rickards regarding the US dollar. 

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"The International Monetary Fund on Friday said that the U.S. dollar was overvalued by 10 percent to 20 percent, based on U.S. near-term economic fundamentals, while it viewed valuations of the euro, Japan's yen, and China's yuan as broadly in line with fundamentals."  ----- Reuters

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If we just do the math, a 10% further drop in the US dollar index puts it at about 84. A 20% further drop comes in at about 74.6. When you look at a long term chart for the US dollar index, you can see the last time the US dollar index was at 80-84 was in early 2014. Gold traded between $1250 and $1400 an ounce back then. 

 

Looking further, the last time the US dollar index was at 75-76 was in 2011. That was the year that gold moved up to an all time high above $1900 an ounce.

 

Earlier this year, Jim Rickards told me that he expected the US dollar to head into a sharper decline the last half of this year. He based that on his belief that the Fed was tightening into economic weakness. Looking at the US dollar index chart again for this year, that forecast is looking pretty good right now.

 

Here is the email exchange we had on this near the end of March 2017 just for the record:

 

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