Nomi Prins: Expect Gold Up, Dollar Down for End of 2017
Just before the inauguration of Donald Trump, Greg Hunter at USA Watchdog had Nomi Prins on to discuss her views on the possibility for the end of 2017 to end with gold up and the U.S dollar down.
Nomi Prins is a best selling author, historian and former Wall Street insider who worked at Goldman Sachs as a managing director, along with several other major banks across the globe. She is currently working on her latest book, Artisans of Money, which will focus on the connections between central banks and the creation of cheap money as a global policy.
When asked about the first 100 days of Trump’s presidency she noted, “There is going to be Congressional pushback. Trump is going to continue to use Twitter and other sorts of outlets to talk about small numbers of jobs that have been created. Whether it is Ford bringing back a single plant, Walmart hiring more workers, or whatever that might be. The reality of the larger infrastructure promises that have been made require funding by Congress.”
“Congress does not move that fast, regardless of Republican or Democrat, especially to issue money and increase the U.S debt. There is going to be volatility between what Trump has promised and what will occur. The dollar will rally not just on the back of Trump winning, but the Fed raising rates. It will also add to a volatile bind. The dollar is going to appreciate every time there is news about potential growth.”
“The reality is the economy is still weak. These things take time. When the Fed raised rates in December of 2015, its forecast was for four rate increases in 2016. We only got one. Now in 2016 when we got one increase in December, they forecast three rate hikes. I don’t believe we are going to get more than a 25 basis point increase, at the very max 50 points, because the Fed is going to continue to watch its models for growth, job creation, wages and stability on the ground.”
“The recipient of that, as it usually has in times of uncertainty and volatility, will be gold up – but not yet. It is going to take a bit of time to see how the promise policies meet what is actually going to be enacted by Congress.”
When asked what direction she views the dollar heading, “I see for the first half of the year, as we look at what is manifesting for the first 100 days and what the Fed will do after its rate hike of 2016, I see the dollar expectations going well. It will stay within a range fairly up. Once the realization that these things take more time than simply infrastructure promises, the Fed will have to take a closer look at what is really happening in the U.S economy.”
“The global economy is very unstable. There is a lot of debt in the world that is denominated in dollars. To the extent that the dollar stays high or goes higher because of those growth promises, or based on Fed hikes, it is going to create more problems throughout the world. That will come back to haunt the U.S. When that happens, I see the dollar turning around and weakening toward the second half of the year. This is why the next half of the year we will see gold up as it gets a bid.”
Hunter then asked what wild cards the former Wall Street insider will be watching in the global economy for 2017. Along with several aspects to watch she noted that China would be worth monitoring, “What is going to be the most interesting to watch is what happens with the U.S in contrast to the Russia-China dynamic. What has happened in the last few years, since the financial crisis, China has taken a leadership role within its own region. It has issued loans for infrastructure development throughout the Asian area, Latin America and has ultimately got its currency into the International Monetary Fund’s special drawing rights (SDR) in October of 2016.”
“It has taken up bilateral and trilateral trade agreements with states like Russia. It has even started initial steps in negotiations with Japan, where it has a historically strained relationship, but on an economic basis they are negotiating for partnerships. They are also having a weakening in their economy because of this extension. The weakening, though, is still a relative strength within the region.”
On the activities of central banks around the world Prins says, “For 2017, if we have a crash it is going to be in the second half of the year. After the missed promises, Fed rate hikes, the dollar being high and then collapsing into the realities of instability and artificialness. That is going to hinge, not just on what happens globally, but in particular what happens in Europe. The European Central Bank (ECB) has now extended its purchase program throughout the end of 2017.”
“If you look at the trend of the ECB as one central bank example of artificial stimulator, we could see volatility to the downside… That will be after the various major European elections happen. If we see a considerable decline it will be at the end of the year, with an expectation toward the second half of the last quarter. I really see a downward trend into that. Not necessarily as a crash, but as these elections, arrangements and realities come into effect we will see a decline in the second half.”
To catch the full interview featuring Nomi Prins analysis on why to expect gold up, dollar headed down and where emerging markets will be that was featured on Greg Hunter’s USAWatchdog.com CLICK HERE.