Gold and macro environment, page-38

The other matter to note is that Trump will extent the tax cuts beyond 2026 and wants to reduce the corporate tax rate which will increase the budget deficit and national debt.

I have seen comments that he is unlikely to reduce spending and may increase it - more debt etc.

His platform seems to be highly inflationary including his approach to immigration as the later will result in shortages of lower paid workers that are currently filled by immigrants - this will lead to wage inflation.

Tariffs will be particularly inflationary and will likely lead to other countries imposing tariffs on USA, etc.

Strengthening of the US dollar will not necessarily reduce the POG as the last year and last 6 months have demonstrated - since mid-February 2024 the POG has risen by over 20% while the DXY is down by 0.1 (ie 104.3 vs 104.2 now) while from mid-march to mid-April 2024 POG went up from $2,150 to $2,375 with the DXY going up from 103.4 to 106. This day 1 year ago the DXY was 101 and is now 104.2 but that rise did not stop POG going from $about $1,980 to over $2,400! Also note that DXY in the last quarter of 2022 is not much higher than it is now but POG went up from about $1,630 to over $2,400 now - that is around a 50% increase!

That is, there are far bigger and broader issues impacting the rise of the POG in recent times than changes in the strength of the US dollar.

My own view is that Trump will be better for POG than it has been than the last 4 years under Biden. Under Trump from end of 2016 to end of 2020 POG went from $1,100 to about $1,900 an increase of 73% but did fall to about $1,700 in first part of 2021 and also in second half of 2022 to not much above $1,600, while the increase has been much smaller under Biden from $1,900 to over $2,400 (only about 25% to 30%).

If Trump acts to mitigate the Fed increasing interest rates too much to cool inflation then a severe bout of inflation may emerge during his 4 years.

I also am of the view that Trump is unpredictable (ie new actions may come out if he does not like what certain parts of the government do or other countries) but seems to follow through on his promises which is extremely likely if the republicans win a majority in both house of parliament..

One must remember Trump's background - he is a property developer and at times was leveraged so much he went bankrupt a few times - he will hate high interest rates. My view is he does not care much or just ignores the problems high debt brings.

I find Citi's comments as reported as very simplistic as we are dealing with a very complex world situation made even more complex from Trump's promises and other unpredictable actions which are going to cause bad blood with a lot of countries especially USA's allies.