The last week or so has sure been a hectic one. The Trump Administration's across the board 'Liberation Day' tariffs came and went with more than 50 countries jumping over themselves to come to Washington to strike a new trade deal. The one holdout was China, which got slapped the hardest with 145% reciprocal tariffs. This morning, I read that China has escalated by imposing their own 125% tariffs on American products. Talk about shooting yourself in the foot...
What we're seeing here is a financial and economic war coming out into the light between the two largest economic powers on the planet and I'm afraid to say, we're just getting started. Stock indices have been in choppy waters since April 2, when the tariffs were implemented with trillions wiped out last week due to the uncertainty caused by the tariffs, although the Dow Jones Index recovered some 3,000 points on Wednesday (April 9) but lost two thirds of those gains by the end of the day. On the same day, the S&P 500 posted its best gains since 2008 while the Nasdaq had its second best single day gain in its history before both slid 3.5% and 4.3% respectively by the end of the trading day.
Also on Wednesday, President Trump announced a 90 day pause on most countries (except China) after these countries expressed a desire to work with the administration instead of fighting it, as China is choosing to do.
The results on the stock markets is obvious but looking around, one commodity is being seriously affected and that's oil. WTI crude has fallen below the $60 mark to $59.78 which to me is a sign of deflation. This is a welcome sign at the pumps but could affect producers if the price of a barrel of oil keeps dropping and there are hints it may drop as low as $40.
Something else is taking a major, major hit this morning. The U.S. dollar index has fallen below 100 to 99.39 for the first time going back to July 2023. A weaker dollar is great for exports and that seems to be part of Trump's plan of rebuilding America's manufacturing base. The USD Index has fallen more than 10 points in the first quarter of 2025 after peaking at 109.65 on January 5.
The weaker dollar is certainly showing in the price of gold which has skyrocketed from $3,000 two days ago to $3,226 where it sits at time of writing. Gold initially took a hit along with the stock indices over the last week, falling to just below $3,000 but quickly recovered and this morning, for the first time ever, gold is above $3,200.
Globalism is dying while regionalism is on its way back. The Covid lockdowns proved that globalism places the entire world at great risk of not getting critical supplies in a timely manner. Add to the mix tit for tat tariffs. Gold, a proven asset going back 5,000 years is once again proving to be a great store of value (and energy).
I also have good news for Bitcoin holders. White Bitcoin briefly fell below $75,000 on April 7, it has quickly recovered in the last two days, as gold did and is now at $82,502! I think it's safe to say that Bitcoin and gold are two great stores of value and should go hand in hand going forward.
Speaking of Bitcoin. I watched a great video on Youtube yesterday by Mark Moss, who boasts over 665,000 followers where he points out that the trade war between the USA and China has exposed a 'fatal mistake' on China's part. He states that China has banned Bitcoin mining several times over the last decade. At one point, most of the Bitcoin being mined was in China, making it the leader in Bitcoin mining but with the constant banning, miners have relocated... to Texas!
Suddenly, the USA is set to lead the charge with Bitcoin mining, NOT China! On March 6, with what can only be described as great timing, the White House announced the 'Establishment Of The Bitcoin Reserve And United States Digital Asset Stockpile'. Mark Moss points out two 'fatal' mistakes on China's part, including the banning of Bitcoin mining with other other mistake being reciprocal tariffs. From this point on, look to China devaluing their currency in an effort to boost exports (which won't work). While we are facing some pain on this side of the pond, I'm afraid china is facing some seriously hardcore economic and financial pain going forward.
Think Amazon, of which most everything they sell comes from China. Not anymore, with 124% tariffs. Amazon will be in a world of pain along with its main beneficiary, China. Think Walmart, of which most everything they sell comes from China. I would not invest in either of these two companies going forward, for at least the next few years anyways as the world restructures itself.
As I mentioned in my last post, there are going to be some big winners but mostly losers. You've probably seen recent headlines suggesting we are entering in or are already in a recession. It's the same here in Canada. CTV News warned of a recession just four days ago. Re-allocating some of your money into sound investments such as gold and Bitcoin and farmland to grow your own foods in these uncertain times is probably a good idea!
The word is, we are entering a period of stagflation, an extended period that can last years where there is no growth or decline, basically a flatline. Forbes reported on March 29 that 'stagflation warnings had begun to emerge in the U.S. economy'. An example of severe stagflation is Japan, which has been flatlining since 1989! The 90s became known as the lost decade for them but as time dragged on and the years added up, an entire generation in Japan has been living under a stagflationary environment.
This morning, Japanese citizens are seeing a record depreciation of their currency, the Yen against gold, topping at 463,656 Yen per ounce. Each day, there seems to be something new to add to the many reasons why we should own gold and Bitcoin (and land). Today, I added a couple more reasons for you to consider. Invest wisely, my friends!
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