Trump's goal is to destroy China, economically speaking and render her another vassal of the USA.
I see no evidence of this, at all.
China has a huge economy, and increasing military and political power. It is in the nascent stages of creating a strategic partnership with the Russians which is very troubling. In short, China is a very substantial opponent, not the kind of opponent any one hegemon can seek to make a vassal without incurring substantial costs itself. No one in his right mind can possibly have such a demented goal. You might believe that Trump is indeed demented, and that is your privilege. I will not make investment decisions on such a premise because I think it is utterly unrealistic.
I heartily disagree with the notion that gold understands that Trump's goal to turn China into a vassal. It is probably responding in large part to the tariff dispute, and it is doing so because tariffs have consequences, mostly negative ones. Imposing them creates the possibility that some very unpleasant things may take place.
Gold has indeed responded to the fears created by the tariff imbroglio, but the timing you suggest is faulty. Gold did not respond to Trump's February 2018 statements at all. Instead, it fell from February 2018 until September 2018, when China and the US began a tit-for-tat tariff dispute which has increased in intensity. As the dispute has intensified, the price of gold has gone up. There are other reasons for it to go up, a tired stock market, the fact that it was probably under-priced, etc., but I will grant you that the major reason has to do with tariffs. How much is a guess.
The rise is in my view probably not a sturdy one. The tariff dispute is a negotiation, one that I think both parties understand as such. The US wants to re-set trade structures that unduly favored the Chinese, and the Chinese for their part want to keep things in their favor. The two will meet somewhere in the middle. A compromise will be reached, and the price of gold will plummet. The tariff dispute will one day be a thing of the past. I think this day will be sooner rather than later because we need to recognize the impact on the tariff negotiation that our domestic politics and the upcoming election will have. Politically speaking, Trump cannot afford tariffs that hurt his voters. Re-election trumps everything. As an aside, the Dems are doing their idiotic best to ignore tariffs - a real and serious issue - in their quest to see which candidate is the bigger lefty. It's an amazing thing to see. That won't last as election time nears, but neither will the trade dispute. It will be settled, unless the Chinese want to try to unseat Trump by being super hard-nosed, something that will actually help Trump's prospects.
In short, the ingredients are all present for a settlement. Gold will fall significantly when even a whiff of it hits the media.
Have you noticed that the Chinese have targeted agricultural products produced in states that are critical to Trump's chances? On the other hand, Trump has not set tariffs on mass market items such as clothing. There are lots of small games being played inside the big game, whose backdrop is our domestic politics and the 2020 election. But there is no bigger game whose goal is to turn China into a US vassal. Those days are long gone. |
