$Dollar Decline Paves Way for Potential Gold Breakout Above $4,400
The U.S dollar's value has been slipping, and this trend is attracting attention from traders. The Dollar Index has fallen below 100, while Treasury yields remain elevated. As a result, investors are reevaluating America's debt trajectory.
Lars Hansen, Head of Research at The Gold & Silver Club, notes that the debasement trade does not begin when the dollar collapses. Instead, it starts when traders question what each future dollar will actually be worth in real terms.
The latest Treasury numbers support this argument. The U.S posted a record $432 billion July budget deficit, taking the fiscal-year shortfall to $1.80 trillion. Net interest expenses have risen 11% this fiscal year and now surpass both National Defence and Medicare spending.
Hansen warns that the danger lies not in the size of the debt but in the rising cost of carrying it. If U.S rates eventually fall while deficits remain enormous, hard assets could become attractive.
Gold carries no sovereign credit risk and cannot be printed to finance deficits, making it an attractive option for investors.