|Even though the past few months have been rather quiet in the physical gold business, we still saw prices rise quite strongly. A likely explanation would be that ETFs and other paper gold investors have pushed up the prices, and thus, it will be interesting to see whether Gold will remain in the current levels or pull back within the next 2-3 months.
Meanwhile, destabilization is spreading. Tensions in Syria have increased, after what many consider as an unconstitutional intervention by the US military; it might only have been an isolated event or it could be a sign of a complete change in Trump’s strategy. I hope some of his voters will remind President Trump about his promise during his campaign to close a deal with Putin, ending the war in the Middle East, and coming to a final halt in terms of regime change. The risk with Trump is that he is a populist who largely focuses on approval ratings. If he only hears the popular voices, he might come to a wrong conclusion and react imprudently in other hotspots, of which there are many.
May will be an interesting month for investors on the European front as well: the French election has the potential to trigger serious and far-reaching seismic shocks throughout the continent. It no longer reflects a “Left vs. Right” struggle, but more fundamentally, a battle of the people against the establishment. The elitist socialist Emanuel Marcon, a firm believer in political globalization and the expansion of the EU project, continues to try to sell the old and long-discredited EU-founding myth of “peace and prosperity”, instead of upholding the inalienable rights when it comes to life, liberty and the pursuit of happiness. The past few months have confirmed that more and more people are waking up to the fact that prosperity cannot return as long as the Status Quo remains. Facing Marcon, the national socialist Marine Le Pen has garnered popular support running on the exact opposite promise: to deliver another crucial nail in the coffin of the EU experiment, in the form of a “Frexit” referendum. The outcome of this election may go a long way in determining whether the break-up of today’s centralized, global system will accelerate or come to a screeching halt. Whatever the outcome is, I’m reminded of the words the songwriter and musician, Peter Gabriel: “you can blow out a candle, but you can’t blow out a fire. Once the flames begin to catch, the wind will blow it higher.”
As political and military threats to global stability abound, it is also important to remember that the economy itself could have a hard time sustaining the potential shocks. Fundamental weaknesses and reckless policies have resulted in a vulnerable and unstable environment which is unlikely to prove resilient in the uncertain times that lie ahead. In this Outlook, we take a closer look at the US economy and the dangers of its structural flaws, which seem to have been largely ignored during the Trump rally that started in November. We also examine the trajectory of Bitcoin, as juxtaposed to Gold, and we analyze the real reasons behind it.
We hope you will enjoy our latest Outlook.