The Tariffs Are Juicing Recession Concerns

News & Current Events Public News & Current Events
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Originally published at: https://peakprosperity.com/the-tariffs-are-juicing-recession-concerns/

Note: Paul and I recorded this on Wednesday and finished just minutes before Trump’s tariff announcements tore the markets apart. So our analysis of that will come soon. However, a good risk-managed strategy such as the one Paul’s firm runs can really blunt the volatility and help preserve capital. To schedule a call with Kiker Weatlh Management, please go to PeakFinancialInvesting.com and fill out the simple form to begin the process.

Executive Summary

In this episode, I dove into the fascinating world of gold and commodities with Paul Kiker from Kiker Wealth Management. We explored the surprising performance of gold over the years, discussed the dynamics of the gold market, and considered the implications of recent large-scale gold purchases. TLDR: It’s Big Money!

I also shared my thoughts on the potential for a great reset and the ever-looming possibility of the Great Taking getting triggered.

The Value of Gold

I’ve long been a gold bug, and my first major purchase of gold was back in 2001. Despite the ups and downs, my compounded annual return on that investment has been 10.25%, which has outperformed the S&P 500, including dividend reinvestment. This return might actually reflect the true rate of inflation over that period. Wall Street and Central Banks have long dismissed gold as a barbarous relic, yet they wrap around gold’s movements in a shroud of secrecy, which gives away their true feelings on the matter. They love gold, they just don’t want you to love gold.

Big Money Moves in Gold

Recently, there was a massive purchase of gold contracts, amounting to over $11 billion in one day. This was a big-money move. Such a large purchase could indicate a lack of trust in the current financial system or preparation for a potential credit crisis. The movement of gold into the U.S. and the demand for physical possession suggests that something significant is happening beneath the surface. It’s a signal that big money is seeking safety in gold, possibly anticipating a financial reset.

Commodities vs. Stock Market

The relationship between commodities and the stock market is at an interesting juncture. The Goldman Sachs Commodity Index, compared to the S&P 500, is at generatinally low levels, suggesting that commodities are powerfully undervalued relative to stocks. This could be a massive opportunity for patient investors. As we see shifts in energy production and demand, particularly with oil and natural gas, the potential for rising commodity prices is significant. This shift could lead to a rebalancing of portfolios towards commodities, which might outperform stocks in the coming years.

Conclusion

As we navigate these uncertain times, it’s crucial to pay attention to the signals the market is sending. Gold and commodities are telling us something important, and it might be time to consider rebalancing portfolios to include more of these assets. The potential for a great reset or a shift in the financial landscape is real, and being prepared is key. Whether it’s through owning physical gold or investing in commodities, understanding the dynamics at play will help us make informed decisions for the future.

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Oh good, I’ve been waiting all day for this.

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Cliff diving…

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These great words of wisdom come to mind:

Knowledge is better than wealth, for knowledge guards you, while you have to guard wealth.

Wealth diminishes if you spend it, while knowledge flourishes when you share it.

A learned man is apt to be generous while a wealthy person is apt to be miserly.

A wealthy man has many enemies, while a man with knowledge has many friends.

Knowledge is the legacy of the Prophets; wealth is the inheritance of the Pharaohs.

Imam Ali ibn Abi Talib

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Who would have thought the guy that destroyed thousands of businesses when he shut the country down for Covid and printed 5 trillion towards devaluing the dollar, would unite the world against it and us so soon into his second term?
Funding slaughter in the Middle East, trying to start war with Iran for a foreign power, continuing his depopulation clot shot program…
I just wonder if the believers will still be wearing their MAGA hats when they receive their cricket meal vouchers, debited from their UBI social credit digital ID cards.

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The big gap in time between sound and video is very disturbing.

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I didn’t have an issue. When I’ve had similar issues, I found stopping and restarting it would help fix the delay.

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Thank you! I did stop as I got tired of the diffused info. … retried a minute agen …and now it seems to be synchronized again!

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Well said, Robert.

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Jeffrey Sachs spells out tariffs. Simply. Brutal reality. Trump is only looking out for his rich donors & buddies. Again. Because that is all he cares about. Because that is all politics is.

https://x.com/nxt888/status/1907679118449418269
"Tariffs are going to lower living standards.

They’re going to wreck the US economy, and they’re being put on for unbelievably bizarre and mistaken reasons that are completely fallacious.

Let me explain.

The United States runs a large deficit in its trade in goods and services — what’s called the current account of the United States — and that deficit is about a trillion dollars.

Trump says, ‘Oh, that’s because other countries are ripping off the United States.’

I can’t even begin to say how absurd that line is.

[The word is childish.]

Running a current account deficit means — and it means precisely — that the United States is spending more than it’s producing. That’s what leads to a deficit. You spend more than you produce.

And we spend more than we produce because we have very low saving in this country. We have an enormous budget deficit.

So the government is like the national credit card — it runs on credit.

It transfers money, pays for wars, pays for Israel’s wars, pays for military bases in 80 countries around the world, pays for that more than a trillion-dollar-a-year military establishment, and hundreds of billions more of associated spending on the military-industrial complex.

And it gives tax cuts for the richest Americans.

It allows for tax evasion by the richest Americans — and I mean evasion, because it doesn’t do audits, and it guts enforcement of the tax laws.

So we hemorrhage deficits and have rising public debt.

And because of all that, the spending of our country is much larger than our national income.

It’s a trillion dollars more than national income.

It is exactly the imbalance of our imports of goods and services over our exports of goods and services.

All of this is to say that what Trump calls a ‘ripoff’ is just the absolute irresponsibility of the political class in Washington.

It’s a corrupt, plutocratic gangsterism that gives away the taxes and tax cuts to the richest people and goes on war after war — on credit.

And that leads to these large deficits that Trump then blames on other countries.

Now he’s going to correct these deficits, he thinks, by raising tariffs.

And of course, it’s going to do nothing of the kind.

The deficits are going to continue because they come from the profligacy of Washington.

They don’t come from the fact that other countries are ripping us off.

So he’ll raise the tariffs. Americans will shift their spending, say, from an imported automobile to domestic automobiles. That’s true. They’ll pay higher prices for those domestic automobiles. And our auto industry will export less abroad.

So yes — there will be fewer imports and fewer exports, and the balance won’t budge.

And none of it’s going to change the fiscal recklessness.

Because what’s Trump’s highest aspiration? It is to continue tax cuts for the richest Americans, which is going to cost another $4 trillion over the next 10 years in the budget.

Because these tax cuts are supposed to end, but he says, ‘No, no, no — these are taxes for my rich donors, so they’re going to continue.’

So he’s not going to solve the budget crisis.

He’s not going to solve the trade deficit — because that comes from the budget crisis.

But what he’s going to do is lower the living standards of our country and the world.

Because trade is beneficial in living standards — it’s called gains from trade.

We buy more cheaply. We sell goods that we have a comparative advantage in. And both sides gain from trade.

Of course, we overdo it, because we overspend — but that’s a completely different thing.

No one’s ripping off the United States by these numbers.

I don’t know whether it’s just rhetoric or ignorance or confusion, but it’s unbelievably bad economic policy.

It will come to no good.

And incidentally, you mentioned rightly that tariffs are, of course, a tax. So who’s supposed to have authority over taxes?

[Congress.]

And Congress has nothing to say in this. This is a one-person show.

What did we become in this country? Even King George wouldn’t levy taxes without the British Parliament in the 18th century.

So what happened to this country? Trump just says, ‘Oh, it’s an emergency,’ and now we have one-person rule — and one-person rule on completely fallacious premises that don’t pass the first day of study of what a trade deficit is.

I taught that for more than 20 years at Harvard University — what is a trade deficit, how does it relate to the excess of spending over production, how does it relate to the excess of investment in a country over a low saving rate?

Well, none of this seems to register.

No one asks a question.

There isn’t a day of hearings.

There isn’t any analysis.

It’s a one-person show based on economic fallacies that are going to wreck our economy, wreck the world trading system.

And I can tell you — all over the world, because I am talking with leaders all over the world, and recently in Asia — the words to describe this, you can’t say in polite company."

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The tiger’s new stripes … same as the old stripes.

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Here’s the vid.

Prof. Jeffery Sachs : The Disaster of Tariffs

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It would be better for all of us if it weren’t true. Only thing worse is pretending that it’s not. MAGA supporters are the new COVID vaccine supporters. They know the exact opposite of what they were promised is happening but can’t process it mentally so they’ll just zip their mouths shut or throw nonsensical excuses at any wall and hope that it sticks.

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The “He was lied to and had bad advisors” apologists from the first term must be just as upset inside. Not sure what options exist. You can throw water on a fire to put it out. Maybe public outrage and mass protests could extinguish this narcissist’s obedience to do as he’s told. That’s not happening though.

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Google is not “over”. Au contraire. Google still has Adwords, their digital ad platform. It has its own AI. It has tons of apps through which they harvest your data. It has Android OS for smartphones, tablets, streamer boxes, auto entertainment systems and so on. And most importantly, a little thing you might have heard of called Youtube, which is a huge cash cow. And that’s just a small sampling of their assets.

Google ain’t going anywhere.

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Need anything else be said?!?

https://x.com/KobeissiLetter/status/1908139269891219871

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Minority opinion time. I don’t have a MAGA hat, MAHA hat or an Elon hat…people are not advertising space…but if I did I’d wear them. To me, Trump is trying to turn around the Titanic in mid-journey, with an iceberg sticking out the side. While people are shooting at him, and worse, activating a giant robot army of lawyers to thwart and impoverish him and a whorde of presstitutes to malign him. What kind of a person takes on that kind of task? An egomaniac convinced of the virtue of his actions, that’s who. Could such a person be dangerous? Yes. Are the times such that a person like this is necessary? In my view, also yes.

We are in the third month of his presidency. I’m giving the guy some grace until I see clear evidence of ill intent. And thanking God that witless, feckless ho Kamala is not in charge. Those were our choices, people.

I’m praying that RFK makes two decision right away: 1) stop the gene therapy jabs in all minors, and 2) begins work on an adverse event reporting system that is outside the control of pharma. If that happens, I’m happy to wait for the data. The harm to our babies makes me mad with despair.

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Tariffs are taxes, period. Adding high tariffs will worsen the economy. Taxes are bad.

But…

If we look at the total tax burden and decrease taxes in other areas, such as ending the income tax, then the overall effect is harder to gauge. People change behavior based on taxes.

Tariffs will help onshoring / reshoring manufacturing. Supply chains will get pulled in.

But the Triffin’s dilemma still holds, where we want to print fiat and export inflation, and that encourages offshoring manufacturing and the financialization of the economy.

So If we really want manufacturing to come back we have to end the “exhorbitant privilege” of freely printing the world’s reserve currency and using that to buy imports at discounted exchange rates.

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Im wondering EU in this as part of eurodollar system, so why couldnt this work better as is with EU having more “independence” that US democrat people or deepstate are not micromanaging every single decision in europe anymore, allowing europe to grow in world trade to its size, reducing that triffin dilemma of US. Benefit of this could be less dependency on defense too in european continent. More manufacturing would be added bonus. To be fair europe also needs manufacturing but I cant see how that would work and healthen economy with “old rule” before Trump as so much was under US corporations or implicit that way. US could also use more allied help in manufacturing, looks challenges are so big no single country can answer them (saw in other podcast mentioned bassets law* regarding economy and electric grids… in this aspect western monolithic giant is vulnerable but couple more independent blocks could be more resilient.

*: it is not basset but for now cannot remember name of it. Need to relisten some podcasts to find that again.

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When one is entering his twilight years having multiple assassination attempts, attempts to malign his character, attempts utterly destroy his lifetime labor of building up his family companies and brand both through law fare and through attempted asset seizure, and that person never surrenders but fights on with more energy and more purpose knowing that his time is short, I do not see this as an ego-maniac’s actions but the rare qualities of a born leader.

Since the PA attempted assassination, I’ve noticed a certain humility developed within President Trump’s speech that I did not see during his first administration.

All humans are flawed but rarely does one show the tenacity and drive to never surrender against all odds. We used to call that: grit.

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