Potential Massive Dollar Rally Coming with Sub $1000 Gold
Right out of the gate we see Trump’s decision to end covert CIA operations in Syria answered with Special Prosecutor Robert Mueller expanding his investigation into Trump business dealings. This is the Anglo-American establishment attacking Trump for going against their interests. The back and forth continues as both sides move and position for leverage over the other. A similar response happened when the Trump Jr. meeting was used as the countermove to the Syrian peace deal that was agreed upon during the G20 meeting.
It should be obvious that the Anglo-American establishment is using a strategy which incorporates both establishment Republicans and all Democrats to delay and derail the Trump mandate. The ineffectiveness of the House and Senate are representative of this game plan. The Russian narrative is meant to misdirect away from the other shenanigans and create a situation where Trump can be impeached if the Democrats gain control of the House and Senate in the 2018 mid-term elections.
Preventing the Trump agenda from moving forward in the House and Senate is one of the core tactics which must happen in order to convince the public to vote Democrat in 2018. Not only is Trump “colluding” with Putin, but he is also incompetent and unable to form a coalition in Congress. Or so the story will go. Every step forward by Trump will be answered with harsh accusations and an intensified narrative. The pattern is now clear.
Regarding the Trump agenda, a massive tax cut along with increased defense and infrastructure spending could send the dollar into a large and sustained rally. This would be supported by further interest rate increases by the Federal Reserve. Such a scenario would hammer gold and the currencies of emerging markets. This would also be contradictory to the Trump administrations goal of reducing the trade deficit and devaluing the dollar.
First of all, the Trump fiscal stimulus plan, which amounts to substantial tax cuts, along with the defense and infrastructure spending, will damage the Democrat brand for at least a decade. This would amount to a huge setback of the liberal left agenda which has dominated American culture since at least the end of World War Two. Add in the Trump successes on reducing illegal immigration and increasing deportations, along with exposing the voter fraud scam which has benefited the Democrat voter base, and you begin to understand the threat which the left faces in America.
Both the left and right in America have been branches of the Anglo-American establishment for a long time. Trump and some of his administration are operating outside of the goals and beliefs of this establishment, and are representing a more macro and international power which is attempting to engineer and implement a multilateral monetary and geopolitical framework.
Maintaining a strong American position is one of the Trump objectives, as it would serve to sway some domestic banking and corporate interests to switch sides. Monetary policy normalization is inevitable and has to take place. This will force a strengthening dollar but will work in opposite of reducing the trade deficit.
This is where Trump will be forced to end the dollar exchange rate arrangements, as reviewed in the post Trump Will Be the One to End the Reserve Dollar. Such an action will partition the dollar from the rest of the international monetary system, and will force further negotiations on a multilateral framework to replace the now defunct unipolar dollar one. But this will also transform the relationship between the historical American establishment and the Anglo (British) establishment.
As further research into our ongoing series on the world adversarial force continues, we will see that these sorts of strategies and methodologies have been used for thousands of years. Severing alliances, shifting wealth, and transforming cultures are all part and parcel of the great battle which has been taking place since the dawn of human consciousness.
Removing the dollar anchor for the rest of the world will power the engines of other economies and nations, while allowing the domestic American economy to thrive and grow without the exporting restrictions which exist now. China and others will at first bounce around varying anchor concepts but will ultimately settle on the joint use of multicurrency baskets and the SDR. Some of these new arrangements will amount to a devaluation of the USD against those specific currencies. Trade agreements will have to be re-negotiated and capital flows adjusted. All of which are discussion points for the Trump administration.
Even gold, which now has an inverse valuation to the dollar, will be the subject of debate as it is reconstituted into the emerging multilateral monetary framework. There are so many different pathways which could be taken, but I’m still of the mind that most nations will eventually place their gold on deposit with the IMF for additional allocations of SDR quotas. Much like nations did under the original Bretton Woods agreement with the United States.
The value for gold that is set could be much lower than it is now. There are several reasons for this. One is the expanded dollar rally which will take place if and when the Trump fiscal stimulus plan is implemented. It could happen with the new budget this October if Trump and company can get a win in Washington. This will correspond with further rate increases from the Fed. These increases will put additional pressure on other currencies and will force some nations to accept the ending of the dollar arrangements and anchor elsewhere. The Chinese renminbi could potentially be one of these anchors as further internationalization takes place.
Under the situation of a strengthening dollar and internationalizing renminbi happening simultaneously, the downward pressure on gold will be immense, especially if the historical base of its value comes into question. The removal of the dollar inverse relationship would provide such a situation. This could hammer gold below the $1000 mark and into the unthinkable for most gold investors.
The shifting war between Trump and the Anglo-American establishment is taking on new dimensions and will increase in aggressiveness over the remainder of this year. Consider that the Democrats are eroding their own support structure with each move and the brilliance of the Trump strategy begins to come into focus. – JC
This article is copyrighted by POM Media©2017. As Premium content permission is not given to be copied and re-posted.
JC Collins can be contacted at email@example.com