Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Trump, Watergate and Gold

  by    0   0

Could Trump be facing his own Watergate?

The president’s firing of FBI director James Comey in the midst of probes into the administration’s possible connections with Russia set off a political firestorm. There has even been talk of impeachment in recent weeks.

While at this point, much of the rhetoric spinning around the Beltway is political in nature, the controversy surrounding the administration still spells trouble for Trump. Even if there is no fire burning underneath the smoke, political opponents will undoubtedly leverage the chaos to slow the administration’s agenda.

Head of commodities strategy at Saxo Bank A/S in Copenhagen Ole Hansen told Bloomberg that could mean a bad news for the dollar.

It’s a political dogfight. That does mean that his ability to act as a president, and to do what he’s promised, is sharply reduced and in that lies the risk of dollar weakness.”

Trump has struggled finding footing in the political arena since he took office. Republicans still haven’t come through on their promise to repeal and replace Obamacare.  And while the administration introduced an ambitious tax reform plan to much fanfare in April, little has happened since.

All of this has been good for gold. The uncertainty surrounding the administration, coupled with geopolitical conflicts, have driven safe-haven buying. As we’ve said before, the only certainty seems to be uncertainty. The Comey brouhaha has added to the chaos. As Bloomberg pointed out, “events over the last couple of weeks have spurred recollections of former President Nixon, who was ensnared in Watergate and resigned.”

One of the biggest impacts of Watergate was that it shattered faith in government. Polling shows just how much the scandal effected American’s perception of their government. The University of Michigan has conduced its National Election Study since 1958. One of the question is do you trust Washington “to do what is right.”

In 1972, before Watergate became the scandal of the decade, more than half of American adults gave the government very high marks, saying they could trust it all or most of the time, while 45% opted for the ‘only some of the time’ alternative. By 1974, high trust had dropped to 36% and has remained below 50% ever since.”

As analysis by Armstrong Economics shows, gold tends to rally when people lose confidence in government.

In our August 8th, 1994 edition of the Princeton World Report, we provided a study of gold dating back to 1721. Every major rally in gold was linked to a crisis in confidence centered around government. Such was the case during the Panics of 1864, 1869, 1893, 1907, 1929, 1974, 1980 and 1987. In each and every case, gold rallied when the full faith in government came into question. The extent of each rally was governed by the extent of concern in each situation. The Watergate scandal of the early ’70s was no exception. That scandal set off two trends as the story began to build in momentum. The bonds and stocks declined as gold rallied.”

Even if there is nothing to the allegations that Trump somehow colluded with Moscow, the political firestorm has certainly eroded faith in his administrations’ ability to get things done. In many ways, perception is reality. It seems unlikely his political opponents will take off the pressure off any time soon. We can expect more hearings, more investigations, more inflammatory Tweets, and more controversy.

If history is any indication, all of this looks pretty good for gold.

Photo by Gage Skidmore via Flickr

WhyBuyGoldNowBanner.070815.590

Get Peter Schiff’s most important Gold headlines once per week click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

 


Related Posts

Feds Run Second-Biggest Budget Deficit in History; Spending Up from 2020 Record

The federal budget deficit for fiscal 2021 came in at $2.77 trillion. It was the second-largest deficit in US history, just behind last year’s $3.13 trillion shortfall. Despite falling shy of the deficit record, Uncle Sam spent even more money in 2021 than it did during the depths of the 2020 coronavirus recession.

READ MORE →

Stagflation Warning: Atlanta Fed GDP Estimate at 0.5%

As governments shut down the economy in response to COVID-19 and the Federal Reserve put money printing into hyperdrive, we warned that it was a recipe for stagflation. Today, it looks like stagnation is here. Stagflation is an economic environment with rapidly rising prices, a weak labor market, and low GDP growth. It’s looking more […]

READ MORE →

Chinese Gold Demand Continues to Strengthen

Gold demand in China was up in September, as the country approaches a peak gold-buying season. Both gold withdrawals from the Shanghai Gold Exchange (SGE) in September and gold imports in August were up, a sign that the Chinese gold market continues to recover after it was hit hard by the coronavirus pandemic.

READ MORE →

JP Morgan Chase CEO Worried About Higher Than Expected Inflation

With CPI data once again coming in hotter than expected, it’s getting harder and harder for the mainstream to swallow the “transitory inflation” narrative. And some people are starting to worry. During an earnings call, JPMorgan Chase CEO Jamie Dimon expressed concerns about higher than expected and persistent inflation ahead.

READ MORE →

American Consumers Continue to Run up Credit Card Debt

Consumer borrowing has slowed somewhat from the record level we saw in June, but Americans continue to pile on the debt. Consumer debt grew by $14.4 billion in August to $4.35 trillion, according to the latest data from the Federal Reserve. That represents a 4% increase. This follows on the heels of a 4.8% increase in […]

READ MORE →

Comments are closed.

Call Now