MoneyWeek/John Stepek/4-26-2022
“Foreign exchange rates are good indicators of where capital is flowing to and where it’s flowing from. Ultimately, asset prices are driven by changes in capital flows. As for what drives capital flows – a good rule of thumb is that capital flows to where it is treated best. And right now, that’s not China.”
USAGOLD note: The “this” Stepek references is the sharp drop in the yuan since mid-April. Even though the yuan’s rapid decline is helping to boost the dollar and hurting gold at the moment (along with a similar disaster unfolding for the Japanese yen), he says to stick with inflation hedges like gold (“handy to have in a panic)” and to allocate more to cash. We referenced this article in yesterday’s DMR and repost it here for those who may have missed it.
Chart courtesy of TradingEconomics.com
