...when Gold has outperformed the general commodity market today, it suggests that all is not well, just like during the early pandemic years.
...this is happening despite an absence of Recession. Why?
...because the traditional economic order appears to be fractured and turned on its head.
...today Trump's tariff is stoking inflation fears, but I think the greater danger from it (tariff) is deflation.
...Trump's tariffs will cause price to rise, but the bigger consequence is rising prices or rather worry over rising prices leads to demand destruction, crimping consumer spending and business sales and rising unemployment.
...concerns over Trump's tariffs over inflation will be enough to lead the Fed to delay rate cuts and Trump is right about Powell becoming Mr. Too Late. But yet it is Trump who has made the Fed decide to stay pat on rates due to reviving inflation fears from his tariffs. The Fed's delay will be enough to percolate resulting in reining in of spending, capital investment and hiring and tilt the US economy into recession or at least an anemic economy that feels like a recession in various sectors of the economy.
...and by the later half of this year, when resilience gives way to a more obvious economic decline, the Fed will start to cut in earnest and Gold will receive its next strong leg upwards.
...the next upward leg would be a powerful force combining
1. Successive Fed rate cuts- beginning of rate cut regime
2. Downward pressure on the US dollar
3. The exodus of funds from equities seeking safe haven sanctuary- Gold
4. All of the above incentivising Central banks, insurers, pension funds to exit long dollar positions in earnest and US Treasuries into a rising Gold price
5. US retailers start participating in the physical Gold market in a replica of what is happening in China with Chinese gold retail market.
