geopolitics of gold – 2017

Posted: December 22, 2016 in Uncategorized

Gold has been trashed and bashed after Trump. It still has a lower trend (to USD$1,020), but some important plays are coming its way.

Inflation is coming (Trump-trade, end of quantitative easing, oil prices and Chinese factory gate prices, as discussed in previous posts) – by the way it is already here but most will not notice as it is shrinkflation (the packaging of a lot of things has got smaller for the same price).

An increase of USD 5 trillion of US Debt under President Trump policies has a clear USD devaluation effect.

The election year in Europe (Netherlands, France Germany, maybe Italy and some issues within Greece) highlights political risks.

On 6 December the Islamic Law has changed and introduced Gold as a Shariah complaint asset. As Muslims represents 20% of the world population and now they can buy gold – it is a definitive positive. Arab Banks can now buy gold as reserve for the Basel III banking rules and on average and “Islamic asset classes” (all other classes where Muslims are allowed to invest in) have all under performed gold.

President Trump (first US President in a long while to do that) clearly likes Gold. Famously he accepted gold as payment from his skyscrapers tenants, he invested millions in gold and he said “bringing back the gold standard will be wonderful, we’d have a standard on which to base upon”. If he will succeed gold with skyrocket, if he fails means that the US Dollar is so much devalued that Gold will move higher anyway.

 

 

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