Van Eck Global Predicts Further Decline in US Dollar, Sees Gold as a Safe-Haven Investment

Strategic Insights -

In a recent statement, portfolio managers at Van Eck Global asserted that the US dollar's value will continue to decline, citing an over-supply of dollars in the world and limited financial asset liquidity. As early as October 1994, Van Eck predicted a decline in the dollar's value, and in March 1995, Madis Senner, Vice President and manager of Van Eck Global Fixed Income Fund, was identified as the most bearish portfolio manager by Barron's. Van Eck's managers believe that gold, as well as hard foreign currencies such as the German mark and the yen, will offer a safe haven from the dollar's decline. The firm's investment professionals, with over 20 years of experience, manage approximately $1.8 billion in assets.

Key Takeaways:

  • Van Eck Global predicted a decline in the US dollar's value as early as October 1994, with Madis Senner, Vice President and manager of Van Eck Global Fixed Income Fund, named the most bearish portfolio manager by Barron's in March 1995 (Barron's, "NO DOLLAR, NO PROBLEM," 3/6/95).
  • The firm's managers believe that an over-supply of dollars in the world will lead to limited financial asset liquidity, causing the dollar to decline further (Van Eck Global).
  • Madis Senner suggests that a flight to safety will occur, driving investors to gold and hard foreign currencies such as the German mark and the yen (Van Eck Global).
  • Derek van Eck, Vice President and portfolio manager for Van Eck Global Hard Assets Fund, notes that gold maintained its value despite the dollar's decline, making it a good hedge against further dollar decline (Van Eck Global).
  • Lucille Palermo, Vice President and manager of Van Eck Global Gold/Resources Fund, believes that gold may break through $400 but will be "choppy" in the short term, with long-term prospects looking promising (Van Eck Global).
  • Van Eck Global recognizes that financial markets are unpredictable and the dollar may rebound, but advises investors to consider gold and other safe-haven investments (Van Eck Global).

Statistics:

  • The dollar's value declined significantly in the months leading up to March 1995, with Van Eck Global predicting a continued decline.
  • Van Eck Global manages approximately $1.8 billion in assets as of 1995.
  • Gold maintained its value despite the dollar's decline in March 1995, with a price potentially breaking through $400 in the long term.

Sources:

  • Barron's, "IN FICKLE FINGERS," 10/10/94
  • Barron's, "NO DOLLAR, NO PROBLEM," 3/6/95
  • Van Eck Global, statement from portfolio managers, March 1995.