Via Bloomberg
Tuesday saw some very strong housing starts data which fly in the face of record mortgage defaults that have also been reported. So, with mortgages going unpaid and rent not being met, why the housing boom?
One explanation is that the US housing market is being used as a means to protect wealth against the potential that the Federal Reserve's huge stimulus package devalues the dollar. With the USD heavily oversold there are important fundamental drivers which weaken the USD.
Warren Buffett shifts his portfolio
Warren Buffett's Berkshire Hathaway sold substantial stakes in American banks like Goldman Sachs and JPMorgan in the last quarter. His stake in Barrick Gold hit all the major headlines as Buffett has historically been against holding gold investments. However, is the shift by Buffett an assessment that banks will struggle to keep their value when the dollar weakens. However, gold miner's chief asset, gold bullion, rallies even higher fuelled by a weak dollar?
The Dollar Index has fallen heavily since March. The launch of virtually unlimited QE, the relative calm reducing safe haven dollar demand, high COVID-19 case count, and the political stalemate have all aided the dollar's slide. Although the FOMC disappointed last night and the dollar gained as the minutes showed a reluctance for yield curve control it remains to be seen how, if at all, Fed policy will change. This should keep the demand for non-dollar assets supported and underscores the remaining bullish case for precious metals.The bullish trendline for gold remains in place and expect buyers on a retest.
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