Gold and Oil: Two Hot Commodities in 2020 Thanks to Trump

Gold and oil have both seen their prices ignited by the first volley in what promises to be a widening global conflict. The provocation of the eastern axis of military cooperation inherent in the naval exercises now under way in the Gulf of Oman among China, Russia and Iraq is probably one the most audacious and potentially fatal unilateral moves by the US.

Killing the number 2 man in Iran at the national airport via a drone strike only pours salt on an already gaping and burning wound. The sheer affront of it is enough to launch an entire generation of suicide bombers against American targets throughout the world, and demands a military response. This is likely the first test of the China-Russia-Iran consortium, and the response will be a significant indicator of just how unified that front will be in the unfolding war.

The problem, however, with geo-politically inspired commodity  price run-ups is they can just as suddenly and dramatically become corrections once the underlying situations are diffused. The great thing about geo-politically inspired commodity price pops is that they are so visibly determined by mainstream news events, giving every Joe Schmo the ability to participate in the sudden windfall.

I saw a woman on Bloomberg recently suggesting that investors who viewed gold as a safe haven asset would be best to re-think that strategy. She then referenced a bunch of data points that made it very clear she, as “JP Morgan Head of Global Strategy” was somehow miscast in the role, in that her discourse demonstrated an extremely short-term horizon. Gold is flirting with intra-decade highs again, which is obviously a pre-cursor to another new price band that may be closer to $2000 per ounce than $1500.

Even if gold only ever touches its 2014 all time high of $1920 per ounce, that still constitutes an exponential win for any investor who has hung on since 2000.

There are other factors driving gold, of course.

The Chinese strategic holding of US debt is a huge weapon-in-waiting against the US dollar, in that should the Chinese ever wish to catalyze a financial panic in America and the World, all they’d have to do is dump US debt onto the market where only a fraudulent cartel of US government buyers would be available to try and hold back such a tide. The could easily be overwhelmed, interest rates would spike sharply, and the chaos that ensued would reveal the negative impetus still simmering below the surface of the world financial system since 2008. Only persistent US dollar manufacturing has layered a lens of delusion over the entire monetary apparatus that is kept in place by near-zero interest rates.

Mid-East War, China Trade War, Impeachment – Take Your Pick!

The ever expanding array of political daggers pointed at Trump’s breast would make Julius Caesar roll over in his grave. Lawsuits for defamation, fraud and sexual predation are all in various stages of progress through the US court system. The impeachment debacle, though obviously a¬†fait accompli by virtue of the distribution of Republicans in the Senate, is nonetheless a historical entry of significance. All are free to choose their opinion, but history preserves only the facts.

Will Trump continue to undermine global geo-political stability through further provocations such as airborne assassinations and yanking on China’s beard on issues of trade and sovereignty?

Will the Russia-China-Iran war exercises result in the dispatch of certain assets from that theatre into the Persian Gulf?

Will any of Trump’s wall of legal challenges succeed in undermining his power?

All this and more hangs over the prices of everything in 2020. Will be interesting, that’s for sure.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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