During this past holiday season, I read through the financial reports of most of the largest investment companies regarding forecasts for the new year. I had to suppress the urge to call this column “Forecasts for 2020 – part 2”, as by the look of things, we seem to be in for more of the same. The sobering fact is that Covid-19 is still very much a part of our lives and will most likely continue to dominate headlines in 2021, and for this reason you should adjust your investment expectations accordingly. Most of the large investment companies agree on a number of opinions and forecasts, and I’d like to discuss a few of them.
Weaker dollar
The prevailing theme across all of the reports, is the opinion that the US dollar may weaken even further in 2021.
Most of them agree that they don’t expect a massive decline from current levels, but the question remains: If we do see further weakening in the value of the dollar, what should we do? One possible solution could be to add gold or gold mining companies to your investment portfolio. Historically (and please note that past performance does not guarantee future performance), the gold price has had a strong inverse correlation with the US Dollar Index. Local gold shares may be considered, while offshore investors could consider investing in a global gold miner exchange-traded fund (ETF).
Higher inflation
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