What has President Trump’s victory done to gold and silver? Well, gold and silver both took a pretty big hit yesterday but this is a ‘news driven move’ according to my guest this week on GoldCore TV. Chris Vermuelen joins us this week, and what a great time to have him on.
I asked him if the US election has signalled the end of the gold and silver rally. As you can imagine, this isn’t an easy question to answer. In the short-term he sees a buying opportunity, but does see ‘the music coming to an end’ and gold rallying once again to $3,000 and $5,000 levels. We also discuss bitcoin and oil. For now, he says ‘let markets do their thing.’
And what a lot there is for the markets to watch right now. At the start of the year you might have looked at this last week and assumed it would all be about the US election. Instead it has featured a US election, central bank announcements, more attacks in the Middle East and snap elections being called.
The point here is that whilst a lot of the media was watching the US election, the world kept spinning with just a little regard for who’ll be moving into the White House in January.
This isn’t to say that President Trump’s second term won’t have any impact. Of course it will, and it already has. The gold price took a hit whilst the US dollar and bonds soared on the back of Trump’s America First policy. Why did gold falter? Trump’s victory brings some certainty to the fore, after months and months of speculation. But, ultimately it doesn’t change much about the state of the US economy and the state of uncertainty across the globe.
The debt and deficit of the US are major threats to both the country’s economy and dollar hegemony. Trump and the US central bank are potentially heading into a death spiral where higher interest rates expand the deficits and accelerate the arrival of an economic reckoning. And don’t be fooled by the Fed’s rhetoric this week, there are such major risks within the banking sector that the FOMC might be compelled to resort to quantitative easing sooner than anticipated. Concerns regarding the opaque shadow banking system abound, but no one is listening. Regardless of who was going to win this election, nothing was going to change any of this.
And of course elsewhere we have had snap elections called here in Ireland and the collapse of the government in Germany. Many analysts are declaring Trump’s victory as a disaster for the EU, as he is such a fan of trade tariffs. Who knows what is to come but a new US President with a America First policy, combined with an economic union that is going through it’s own political turmoil is yet more uncertainty in a world raging with it already.
In short, the election of President Trump is not the end of uncertainty and so use the pullback in prices as an opportunity to prepare for what comes next.
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