Trump's Tarrif Tantrum Will Cause Troublesome Stagflation And Drive Gold Much Higher

Trump went ahead with his tariff tantrum by putting tariffs on every country that America trades with to ultimately punish American companies and consumers.

While vilifying every trading partner, not a peep was said about American companies being the ones that buy from the trading partners to provide stuff that American consumers want to buy at the prices they want to pay.

The costs of Trump’s tariffs will be felt practically immediately because they are not finally paid for by the companies sending goods into America, they are paid for by consumers. They are a painful tax on consumers that will give consumers sticker shock when they buy stuff and it will be felt in the coming days.

Even before the tariffs, mass deportations were already causing the economy to slow and inflation to kick in. Throw tariffs on top of that and the economy will slow down toward a recession and drive prices much higher.

Stagflation was already a problem during Biden’s term, but the economic statistics overstated the growth and understated inflation. Mass deportations and tariffs will make it undeniable to everyone. Instead of a percent or two of stagflation hidden by phony economic statistics, the stagflation is about to be more pronounced.

If the economy drops toward a recession or into one, and inflation goes up to 4-5%, that is a big problem and it is highly likely with the mass deportations and tariffs. Trump’s stagflation could be much worse than Biden’s stagflation and Carter’s stagflation as well.

Trump is causing problematic stagflation while there is a Death Spiral of Debt and the cost of servicing the debt is unsustainable. These issues were not around during Carter’s presidency. So, Trump’s stagflation could, and likely will be much worse than Carter’s stagflation.

Wall Street hates tariffs, as they should, and as soon as he started talking, Wall Street stocks got hammered. Trading in the futures market saw the DOW, S&P 500 and NASDAQ got pummeled. The DOW dropped by 1000 points, the S&P 500 was down over 3% and NASDAQ was down by around 4%. The selling pressure is even more pronounced today, I imagine Trump’s approval ratings on Wall Street and with investors is plummeting.

I have been seeing on social media, and listened to market commentators mentioning that gold is telling us something. It certainly is, and it is saying loud and clear that stagflation is a problem that is about to get worse.

Gold didn’t need stagflation, it was already in a bull market due to the Death Spiral of Debt and the alarming growth in the cost of servicing the debt. This round of stagflation is inflicted by Trump to feed his ego and desire to be a bully. Gold was already in a perfect storm and it has just got more perfect.

Gold is heading a lot higher this year and for many years because the debt crisis worldwide and cost of servicing the debt, plus the stagflation, is going to drive the world to the Gold Standard 2.0 much faster than most think.

The big winner in the return to the Gold Standard are the gold stocks. High-cost producers are making more than $1000 per ounce and the low-cost producers are selling gold for more than double what they produce it for which is making them free cash flow machines.

The gold miners are making tremendous profits, but what they are struggling to do is increase their production and replace their old mines with new mines. They are sitting on impressive amounts of cash and are going to get more active with mergers and acquisitions.

They have the cash for M&A, but the menu of high-quality development projects and explorers with important discoveries are slim pickens. I’m sure they would love to buy smaller companies, but they don’t have a lot to choose from.

With few M&A options, it brings up another important topic. Which is that the supply chain from the gold miners, to the developers and down to the explorers is broken. The broken supply chain of gold is another reason that gold is going to reach prices that few think, even extreme gold bulls.

In 2024, I wrote that I see gold hitting $20k within 10 years, with the Death Spiral of Debt, unsustainable cost of servicing the debt, and the stagflation are adding to my conviction.

It looks like Trump’s tariffs are going to put the Fed in the spotlight and they will have to decide to cut rates and get back in the QE business, or throw the economy, workers and the stock market under the bus, or inflation. They will choose to throw inflation under the bus.

When the Fed gets back in the QE business, this will be another bullish factor on the growing list of reasons to be bullish on gold.

Troublesome stagflation is coming much sooner than many think and it will be very bullish for gold and silver. Trump just put fuel on the fire with his tariff tantrum.

The price of gold is turning every gold miner into a free cash flow machine. The generalist investors won’t be able to ignore them for very much longer. A key reason is that they are running out of options to park their money.

Gold is the best parking lot by far to protect wealth and the constant destruction of purchasing power in every fiat currency. Gold stocks are the place for astute investors to grow their wealth.

Trump was right when he said there's a Golden Era coming, and that is in gold and the gold stocks.

All the best,

Allan Barry Laboucan