A Golden Age for Gold
This week, with efforts channeled towards prepping for a McAlvany Wealth Management webinar next Thursday, HAI will be just prices with only a few quick comments on this week’s market action.
Obviously, the big news of the week was a flurry of deals struck (or deal progress announced) by the Trump 2.0 administration. The U.S. and China inked an initial trade deal. Trump also furthered a potential deal to end the Russia/Ukraine conflict. Trump met with Saudi Arabia and agreed to $600 billion of artificial intelligence and defense deals. The U.S. also said it’s close to a nuclear deal with Iran. And previously frozen Chinese rare earth magnet exports appear to have, at least partially, begun flowing to the U.S. again.
The market reaction to “progress” on several important fronts has, understandably, been wildly enthusiastic. The manifestation of that enthusiasm has been a partial reversal of the trends that have defined market action previously in the year. That means, in short, the market bought stocks and sold gold this week.
To put it plainly, while stocks could continue to benefit from a thawing of trade tensions for a while, the “sell gold” reaction is very likely only a temporary reaction more about working off overbought conditions in the gold market. In short, the current $3,500 peak in the gold price registered in April is almost certainly not the peak for this gold bull market. In fact, HAI doesn’t view the events of this week as doing any damage at all to the secular drivers behind HAI‘s high-conviction view that gold is headed much higher over the years to come.
The news flow regarding the trade war has been changing day to day and week to week at a breakneck pace, and this was just one week. That said, if the news of this week is directionally definitive, it suggests that if the Trump administration is serious about effecting a significant MAGA “rebalancing” of the global system, that rebalancing is likely going to have to be achieved via a much weaker U.S. dollar, inflating the debt away, and perhaps implementing some form of yield curve control (or it’s functional equivalent) until the goals of revitalized domestic manufacturing and reduced debt can be sufficiently achieved. That implies, for lack of a better term, a golden age for gold.
HAI encourages all HAI readers to tune into our MWM webinar next Thursday for much more information on the current “grand global economic reordering” and how it stands to benefit both gold and hard assets more broadly. Please tune into:
The Grand Economic Reset: What It Means for Gold and Commodities
Thursday, May 22 | 10:00 AM MT
Weekly performance: The S&P 500 was up 5.27%. Gold was down 3.62%, silver lost 1.34%, platinum was down 1.01%, and palladium was off 1.48%. The HUI gold miners index lost 8.56%. The IFRA iShares US Infrastructure ETF was up 3.27%. Energy commodities were volatile and mixed on the week. WTI crude oil was up 2.41%, while natural gas lost 12.38%. The CRB Commodity Index was up 0.32%. Copper was down 1.20%. The Dow Jones US Specialty Real Estate Investment Trust Index was up 0.24%. The Vanguard Utilities ETF was up 2.33%. The dollar index was up 0.75% to close the week at 101.09. The yield on the 10-yr U.S. Treasury was up 10 bps to close at 4.48%.
Have a wonderful weekend!
Best Regards,
Morgan Lewis
Investment Strategist & Co-Portfolio Manager
MWM LLC
