From :



The gold price is up sharply this morning gaining $7.50 at $1325 – in response to the developing trade war and a Trump administration promise to slap heavy tariffs on steel and aluminum imports. Silver is lagging – up 6¢ at $16.54.


This morning’s financial news is filled with promises and predictions of retaliation with a former China ambassador, Max Baucus, warning that China will take retaliatory action, mostly against U.S. agricultural exports. In the background, there is always the concern that China will begin unloading U.S. sovereign debt from its Treasury.


President Trump, for his part, appears resolute on his trade stance saying in an early morning tweet that “trade wars are good and easy to win.” Global stocks tanked overnight and Dow is off nearly 200 points as we begin the trading day in the U.S. The dollar has been in sustained free fall since the tariff announcement and gold is up $20.


Daily FX’s John Kicklighter offers this interesting take on the plight of the dollar and gold in light of the developing trade wars:


“Among the top rung of havens is the US Dollar and Treasuries. Yet, there is a problem in this traditional formula. The United States is the origination of this pressure. Furthermore, the benchmark currency has the most to lose. It is the most heavily used mode of exchange by far which has led to considerable capital circulating into the country seeking investment. If the US makes a move towards isolation, capital naturally diverts away from the country and there is a permanent devaluation in turn. . .


We saw what risk aversion blended with a uniform devaluation of the world’s top ‘fiat’ assets could do for gold following the last financial crisis. In 2008, the global financial system was coming apart at the seems and the largest central banks responded by massively increasing monetary policy by cutting benchmark rates towards zero and introducing large stimulus programs. Given there was no major liquidity outlet for capital to move while seeking safety and stability, investors reverted to their ancient solution: go to gold.”