$GLD, $XAU, $USD
FLASH: Gold could 2X overnight, especially if President Trump uses it as a weapon in his battle Vs the Fed.
The Fed controls the Buck, the Buck is the world’s trading currency, and so the Fed controls the world. A stronger USD hurts the world’s growth prospects. It also hurts President Trump’s growth initiative.
We have witnessed this 1st hand as the Fed raised rates in Q-4 of Y 2018 and tightened monetary policy through their balance sheet runoff. Global markets seized and US equity markets dropped 15%.
This action has killed The Trump growth agenda.
President Trump has been vocal about it all and has stepped up his attacks on Jerome Powell.
He has called him “crazy,” “his greatest threat,” and in a recent Tweet said: “Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0% GDP, & Stock Market, would have both been much higher & World Markets would be in a better place!”
We have never before had a President so openly critical of the Fed.
The WS-J reported last week that President Trump personally phoned Fed Chairman Powell on 3 occasions in March to complain that his interest rate hikes and balance sheet run-off have hurt the growth he has been trying to achieve.
He said hiring Jerome Powell “was one of the worst decisions I have ever made,” and told Chairman Powell directly, “I guess I am stuck with you.”
This open critique of the Fed has come in coordination with 3 other Key recent events.
The 1st is the nomination of “loose money” Stephen Moore for Fed Governor. Mr. Moore, who wrote “Trumponomics,” is very close to the President and has called for an immediate 50-basis point reduction in interest rates.
And 3rd there is the proposed nomination of Herman Cain to the remaining open Fed seat. Mr. Cain is huge proponent of going back to the gold standard.
Much Adam Baratta’s book “Gold Is a Better Way” focuses on Fed officials and their policies and the upcoming devaluation of the USD. It explains why the USD is set for a massive devaluation over the next decade. This 1st step by President Trump to diminish the Fed is the beginning of devaluation.
What Trump and team are openly doing is unprecedented, and is meant to damage the credibility of the Fed. Remember, every USD has 3 words on its face: Federal Reserve Note.
When The Trump Team aggressively go after and weaken the Fed, they are effectively trying to go after and weakening the USD. As the Fed is publicly challenged, then changes course, then folds, the institution is then damaged. The result means a much weaker USD.
The more I have studied this recent progression, the more convinced I am that President Trump and Company are exacting a deeper plan that is working. They have gotten Chairman Powell to pivot.
Now he is “remaining patient.”
“The next step is to get him to fold. I believe this will mean a “controlled devaluation” of the USD, and will mean a much higher gold price overnight.” said Adam Baratta.
Where this gets really interesting is that President Trump could effectively use gold to devalue the USD and make gold 2X overnight through 1 executive action. He could instruct Treasury Secretary Steve Mnuchin to change the way gold is valued on the books.
Currently gold is valued at $42 oz, which was the price of gold in Y 1971 when President Nixon closed the gold window. By directing Secretary Mnuchin to “mark gold to the market price,”President Trump would cause the Fed’s balance to strengthen by $350-B. As a result, gold could immediately soar.
President Trump understands a weaker USD is the Key to unleashing the US economy. And so far the plan has worked.
The next step is a re-pricing of gold on the Fed’s balance sheet that could cause the price of gold around the world to 2X overnight.
Paul Ebeling, Editor
Editor’s Note: Mr.Baratta is the author of the national best-selling book “Gold Is A Better Way.” He is 1 of the leading voices in the field of investments and precious metals today, and is the co-owner of Advantage Gold, the highest rated precious metal firms in the USA.
Have a terrific weekend.
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