Tags: Sean Hyman | Federal Reserve | tapering | dollar

Sean Hyman: Fed Tapering Will Continue to Push Dollar Down

By    |   Thursday, 20 February 2014 05:55 PM

The dollar has suffered as the Federal Reserve has begun tapering its quantitative easing, and that trend will continue, says Sean Hyman, editor of Newsmax's Ultimate Wealth Report newsletter and a Moneynews.com contributor

"A lot of people thought the dollar's going to be pushed up because of tapering, but the dollar was still falling on the mention of tapering," he told John Bachman on "America's Forum" on Newsmax TV. "It was falling when tapering was instituted, and the dollar is still falling."

As for the U.S. economy, Hyman says it's slowly improving. "But I don't feel that's going to translate into higher stock prices because that's already been priced into stocks," he said.

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"Investors were comfortable doing that [buying stocks] because of the stimulus the Federal Reserve was providing for the stock market. So stocks could diverge from what the economy actually ends up doing."

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If stocks fall, there's a chance that Fed Chair Janet Yellen could lead the central bank to slow its tapering or halt it temporarily to make the markets a bit more comfortable, Hyman says.

Any sharp selloff in stocks could be damaging to the economy, he says. "That's where the problem could hurt investor sentiment, could curtail consumer spending and could possibly reverse that [economic strength] at some point," Hyman said.

"So I don't think we have a lot of risk just yet, but in the coming months a lot rides on how severe the stock market correction is." The economy can handle a 10 percent correction, Hyman says. But a 40 to 50 percent move would be a whole different ball game.

When it comes to gold, Hyman is "very bullish." He sees the market's bearish sentiment as a good sign. "When everybody's on my side of the trade is when I start to get worried," he said. "I believe we're on the next leg of the upturn. My next targets for gold are in the $1,400s and then the $1,600s."

April gold futures settled at $1,316.90 on New York's Comex Thursday.

The fundamentals are supportive for gold, Hyman says. "As long as you continue to print money, the dollar continues to decline, you keep racking up debt as a nation. That's a good day for gold."

Physical demand is strong for gold, Hyman says. "You look at the reports from the U.S. Mint: They've been selling out of gold coins."

In emerging markets, the worst is over, he says. "A lot of the capitulation already has happened in emerging market currencies and in emerging market stocks," he said. "If you look at the emerging market stock markets, they're some of the few values that can be found in the world today."

So money will migrate out of the dollar and U.S. stocks to markets such as Turkey, Indonesia, China and Russia, Hyman says.

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The dollar has suffered from the Federal Reserve's tapering of its quantitative easing, and that trend will continue, says Sean Hyman, editor of Newsmax's Ultimate Wealth Report newsletter and a Moneynews.com contributor.
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Thursday, 20 February 2014 05:55 PM
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