Cut through the noise, and the Trump administration’s strategy becomes clear: it wants lower yields and a weaker dollar. The play? Get other nations to spend more so the U.S. can ease off the accelerator. Germany’s $1 trillion pump was just the beginning. Now, the question is whether Canada will be next in line to ramp up its spending.
Steve Miran’s message today was unambiguous: the Trump administration is laser-focused on solving the U.S. current account deficit that has plagued the nation for decades. To do this, a significant devaluation of the dollar seems inevitable, especially when the dollar sits at one of its most overvalued points in over a century. Don’t expect the administration to admit this openly, but it may be the only viable path forward.
Meanwhile, European bond erosion is accelerating, creating the perfect storm. More government spending and rising commodity prices, including a jump in the dollar, are putting additional pressure on the markets. Gold dipped as tensions eased in the trade war, but there’s one thing that can’t be stopped: the physical demand. Over 473K ounces of gold have been delivered to COMEX vaults, pushing the total to a record 1,318 tonnes.
But don’t think the gold rush is over. The real action is now shifting to silver. If gold hits $3,000, the next move is likely to be in silver. And here’s a thought that should give you pause: gold equities have never been cheaper compared to the U.S. economy. To put it into perspective, the average gold miner would need a 3,300% increase relative to the S&P 500 to reach the levels it hit back in 1980. Now that’s something to think about before dismissing the gold market.
Sources:
https://x.com/MacroAlf/status/1904220919079256492
https://x.com/TaviCosta/status/1904309195715092675
https://x.com/great_martis/status/1904495041026175263