I have been working in the gold space for a few decades now, and very rarely have I seen the conditions for history to repeat itself unfold in front of our eyes in this manner.
I’m talking about the events taking place after President Trump took office again, knowing what he accomplished during his first term.
A whirlwind of economic policies and political maneuvers defined President Trump’s first presidency.
But through it all, two levers employed by Trump at that time emerged as central to fulfilling his agenda seen in the headlines of 2016 before he was elected:
Imposing tariffs on competing nations:
Demanding the Fed lowers interest rates:
The Trump administration vigorously promoted and implemented these two policies during his first term. We saw it by Trump bending the Fed’s will to reduce interest rates 3 times during his first term, and by using tariffs to renegotiate North American trade agreements and placing a lot of pressure on competing nations.
Trump’s agenda reshaped trade dynamics and domestic economic sentiment. The job markets improved, and US exports soared, but it also sent shockwaves through the global financial markets.
The tariffs also disrupted global trade, and lower interest rates spurred concerns over a devaluation of the dollar, so…
Investors during Trump’s first term increasingly turned to gold as a safe-haven
And the roaring demand sent the price of the precious metal flying. Between Trump taking office in January 2017 and to leaving office in January 2021, the spot price of gold rose from $1,209 per ounce to $1,853 per ounce. This historic rise was the market’s response to tariffs and a lower interest rate.
But now that President Trump is back in the oval office…
We are seeing history repeat itself
We’re just weeks into President Trump’s second term, and it looks like he is using a page from the same playbook, forging forward with the same two strategies he employed during his first term. Today, the use of tariffs and calls for lower interest rates are once again at the forefront of Trump’s agenda, which will end up “Making Gold Rise Again.”
In fact, as I am writing this, Wall Street and central banks are looking at the same historical precedent from Trump’s first term as gold responded to the policies he employed then. And they are not waiting. They are acting in response to the same policies today by going all in on gold creating supply shortages not seen in years.
And this is raising the price of gold, hitting an all-time high of over $2,929 this week.
And if you’re asking yourself if you missed the boat, or if the price of gold now is bound to correct, what you should ask yourself instead are these two questions because the answers will provide you with a clue to where we are headed:
Is President Trump likely to change his use of tariffs and his calls to lower interest rates?
Then what do you think will happen to the price of gold?
We are available to answer any questions you may have about where the price of gold is headed.
May you be safe and well during these uncertain times.
Paul Stone, CEO
Colonial Metals Group