• Trump pulls out of Paris Climate Accord
  • Gold pauses ahead of non-farm payrolls data
  • In Gold We Trust 2017 released
  • Reports on the ‘Everything Bubble’
  • On average gold is up 5.88% ytd, since start of 2017.
  • Trump ‘was the trigger of the sudden reverse thrust of the gold price’
  • Reorganization of the global monetary order considered a ‘grey swan’

Trump’s announcement late yesterday that the US would be pulling out of the landmark 2015 Paris climate accord saw gold prices retreat. Markets are now awaiting the release of the non-farm payroll data. General consensus is that 210,000 new positions were added in May. However, this could be an underestimation given the stronger ADP number yesterday.

The Paris climate deal, jobs numbers, elections and terrorist attacks are all important ingredients in the tale of an economy. But they should not be considered individually when considering the gold price or gold investment. They all come together to form a far more complex story, which is the global financial and geopolitical system.

Yesterday Incrementum’s widely respected In Gold We Trust report was released. The authors do a stellar job of considering not only the wider picture but also what we can learn from history. This is refreshing in an age when many mainstream, day-to-day analyses look for individual bullish and bearish signs for gold, when in reality all the signs need to be considered together.

The report covers a multitude of angles and considers even more economic, financial and political factors. As we often conclude, investors should not focus on small events but rather look at what they all point to and why they are happening. This is in contrast to the mainstream media who often can’t be considered to do this. Perhaps we should not be surprised by this, an academic study released last month found journalists have ‘a lower than average ability to regulate emotions, suppress biases, solve complex problems, switch between tasks, and think flexibly and creatively.’ Oh dear!

Perhaps we can now understand a little better why we fail to spot much coverage in the mainstream of the underlying dangers in the financial system and how investors and savers can protect themselves. With this in mind we suggest you enjoy the highlights of the In Gold We Trust Report, below and continue to take the mainstream financial media with a pinch of salt.

Frustrated with gold? Blame Trump

The gold price was having a great time in the first half of last year. Long-term we believe we know where it is headed and it looked like, in 2016, that it was well on its way. Then something happened and it changed its mind. Why? Incrementum’s authors Ronald-Peter Stoeferle and Mark Valek argue that ‘ironically’ Trump ‘was the trigger of the sudden reverse thrust of the gold price.’

Ironic on account of Trump’s anti-Wall Street rhetoric and the seeming mutual distrust between the then President-elect and the financial industry. However Trump won by giving new hope to ‘ a class of society that had lost its trust in the economic system and political institutions.’

As a result of this new found euphoria in the US and global economy, ‘stocks received another boost, and the increase in the gold price was (temporarily) halted A fantastic first half [for the gold price] was followed by a disastrous second half, where the newly won confidence was brutally destroyed. Gold bulls were being tested again, with the market turning into a pain maximiser.’

‘The big caesura in the performance had to do with the election of Donald Trump.’

Trump is merely one character in this play, he came to the stage when the story had already been laid out an economy of bubbles, inflationary monetary policy etc etc. Trump could be seen as someone merely hurrying along the inevitable. Stoeferle and Valek both recognise this and consider the other characters, props and scene changes in what may well turn out to be a tragedy.

The Everything Bubble

One of the major areas that was inevitable no matter who is in the White House is the US Equity market. Rarely do you hear gold investment advocates recommend the classic investment portfolio which ‘calls for shares to satisfy the risk appetite and bonds as safety net.’ When people invest in gold it is not to get rich quickly, it is to diversify their portfolio, hold some financial insurance and to own a safe haven with zero counterparties.

The authors of the In Gold We Trust believe the classic investment portfolio ‘must be critically questioned’ on account of a bubble which reaches beyond individual areas. Renowned analyst Jesse Felder calls this the Everything Bubble.

‘The valuation level of the US equity market is nowadays ambitious, to put it mildly both in absolute numbers and in terms of the economic output. This prompts the conclusion that the U.S. is caught up for the third time within two decades in an illusionary bubble economy created by money supply inflation and equipped with an expiry date. In comparison w