The dollar has soared to multi-year highs against a range of currencies in recent weeks, but Peter Schiff, CEO of Euro Pacific Capital, doesn't think the move will last.
That's because the U.S. economy is in trouble, and the Federal Reserve is going to refrain from raising interest rates, igniting inflation, Schiff says.
The economy grew 2.4 percent last year, and consumer prices dipped 0.1 percent in the 12 months through January.
"I'm surprised it's rallied this much but that doesn't mean it's permanent," he tells Yahoo
. "When traders wake up to reality and realize how wrong these [bullish dollar] bets are, they're going to unwind these trades and the dollar is going to unwind quickly," Schiff notes.
"When people realize we can never raise rates and it's permanent QE [quantitative easing], that the Fed can't shrink its balance sheet and has no ability to control inflation, there will be no place to hide," he adds.
"The real move of the dollar is going to be a crash. . . . The Fed has inflated the mother of all bubbles."
All this will be good for gold, Schiff maintains, predicting it can ultimately rise as high as $5,000 an ounce. "There's no real ceiling on gold because there's no floor on the dollar."
Gold dropped to a four-month low of $1,142.92 Tuesday.
ANZ Bank analysts are bullish on gold too, forecasting it will reach $2,000 in the next decade and $2,400 in 2030.
So what's going to spark the move?
First, there's the growth of Asia's middle class, ANZ chief economist Warren Hogan and commodity strategist Victor Thianpitiya write in an article for Barron's
"The income effect implies that consumer purchasing power increases as real wages rise, and as such, the demand for gold will increase as more people can afford to buy it."
Then there's central bank demand, the ANZ analysts explain. "Over the next decade, emerging market central banks will need to hold a larger stock of physical gold in their vaults to shore up confidence in the newly floating exchange rates."
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