Since I left Japan in early September, gold has gone up more than 25% to above 4,000 dollars per once. What is this telling us?
The IMF is saying that there is no exit from the dollar in international transactions but could they be wrong? If their statistics only cover what they are aware of, they could be missing large and significant transactions contracted in other currencies or in non official channels.
Likewise, it has become noticeable that significant jumps in the price of gold are taking place during the night in London and New York. Is this only indicating increased demand in Asia or more ominously a shift of gold trading from West to East?
Finally, as tensions rise in Eastern Europe, the Middle East and South America, more specifically Ukraine, Iran and Venezuela, it makes sense that more investors and countries could be reappraising the share of gold in their portfolios.
A long, long time ago, during the Summer, Trump was aiming for a Peace Nobel Price. Arming Ukraine was a footnote since this was the responsibility of Europe which anyway was going to foot the bill. Are they also supposed to pay for American technical experts and satellites necessary for cruise missiles such as the Tomahawk?
Bombing Iran was presented as a punctual military intervention necessary to prevent a larger war with Israel. Great success we were told! But not so great that more bombing has now become necessary?
As for Venezuela, the justification simply eat the cake. Attacking a sovereign nation in order to disrupt drug smuggling? Even for those who believe that drug smuggling from South America is indeed a problem, maybe a war with a country should be the very last option?
But let suppose that the US, Europe and Japan somehow can find a solution to their exploding deficits and sinking currencies and that somehow war on multiple fronts does not spill over into a third World War, what should other countries, BRICS, ASEAN, Mercosur and the likes think about these developments?
Isn't it obvious that while Trump is 100% focused on his domestic fight against the deep state, he has completely outsourced his foreign policy to the Neo-cons and their previous long term international meddling?
Add to this a complete disruption of international trade and the global supply chain with tariffs and the America first policy for which we haven't yet seen the consequences, and it is clear that the omen are rather bleak.
Will everything turn from bad to worse? Probably not but with so many black swans over the horizon, having fewer dollars and more gold may be a very wise decision indeed. Will dollar assets be confiscated as for Russia and other countries, debased with inflation or cancelled with re-denomination? Sooner that later something is bound to happen. This is what stocks and gold at record levels are telling us.
The only thing we do not know yet is the deadline but the vertical rise we are seeing right now is telling us that it cannot be long before either valuations are proved absurd and the bubble bursts or the markets are proved right and the world explodes militarily and financially. Let's pray for the former and prepare for the later. We may not have very long to wait to know the answer.
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