On April 2, President Trump's 'Liberation Day' tariffs came into effect after he signed an executive order imposing a baseline tariff of 10% on all countries while several now face tariffs above 30, 40 and even 50%! The hardest hit was China which now faces 54% tariffs, along with 49% for Cambodia, 46% for Vietnam, 26% for India and the European Union, which now faces 20% tariffs. There were no new tariffs imposed on Canada or Mexico.
As news propagated around the world, a broad selloff followed Thursday and Friday. The S&P 500 lost over $4 trillion in capitalization, making the last two days the steepest drop for the S&P on record. The Nasdaq has lost some 10% over the last two trading days. The Dow Jones Index did not fare well either, dropping about 1,700 points on Thursday and slumped further on Friday for a total drop just over 2,200 points or 5.5% where it now sits at 38,314. Since peaking in February, the Dow has dropped 14%.
Oil saw a steep drop from over $72 for Brent Crude to $65.58 at time of writing. West Texas Intermediate has dropped 7.41% to $62. This translates to much lower prices at the pumps. Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, in an interview with Kai Hoffman on his Youtube channel 'Soar Financially', predicts the price of a barrel of oil will fall as low as $40 which will then lead to broader deflation. He also predicts $4,000 gold!
Speaking of gold, it dropped by over $100 an ounce. Considering that gold topped $3,000 for the first time around March 14 and continued on to over $3,150 over the next two weeks, up until April 2, this drop feels more like a healthy correction along with the broader markets. Seeing it hold at $3,036 after all the 'carnage' of the last two days is excellent news for the yellow metal.
Kitco Gold Chart Week Ending April 4, 2025
Hardest hit was gold's little cousin. Silver, which was hovering at $34 saw the steepest drop, falling to $29.55 by Friday's close, the first weekly close for the new second quarter of the year. According to Sprott Money, the amount of silver imported into COMEX vaults between December and March has been absolutely through the roof, similarly to gold. Over 34,000 contracts stood for delivery and at 5,000 ounces per contract, that adds up to a mind numbing 162,365,000 million ounces (5.05k MT).
Kitco Silver Chart Week Ending April 4, 2025
The smart money is buying silver at firesale prices. In fact, the silver to gold ratio hit 100:1 on Friday. The last time it went over 100:1 was in March, 2020 at the start of the 'Covid lockdowns'. Back then, the ratio went as high as 124:1, the highest in history. It eventually dropped to 80:1, as we saw just last month. Being back at 100:1 literally guarantees silver is a great investment.
Bitcoin is down just under $4,000 in the last two trading days but continues to hover at $82,796, close to the average going back to March 9. It's fair to say Bitcoin remains unaffected by the Tariff spat but according to 'Bankless Times', there was indeed a broad selloff across the cryptosphere totaling over 4% or $2.65 trillion, on Thursday alone.
What's happening is that the USA under the Trump Administration is rebuilding its manufacturing base and will no longer be buying excess exports from the rest of the world. Will this cause a domino effect and force other countries to follow suit? Very likely...
As for the stock indices and the mainstream media 'bloodbath' headlines, I'd like to make a point. The Dow Jones Index hit a record 18,000 points in the month of April, 2016. It peaked at 45,014 on December 2, 2024. The Nasdaq is up about 150% since 2020. The S&P 500 hit a record high 6,144 points on February 18 of this year. On April 7, 2016, the S&P hit a record 2,047 points. This morning, it sits at 5,074 points. It's still up about 250% over the last 9 years!
The question to ask is, 'How on Earth did these Indices reach such heights'? Well, the obvious answer is lots and lots of money printing. Trillions of it and now you can see where most of it went. The indices are full of hot air and like a hot air balloon striking electrical wires, they are likely doomed to continue falling.
Mike McGlone also states a possible 1929 style crash may yet materialize as the world re-aligns and points to gold as the obvious beneficiary as investors scramble to protect their wealth. A possible gold revaluation on the table is keeping a floor on the price of gold at about $3,000 for the time being but don't be too surprised if the valuation doesn't come until gold hits $4,000 as this would create about $1 trillion in 'new' treasury money. AND BOY, do they need the extra cash right about now to help clean up, without having to borrow and create new debt, avoiding any interest applied to it.
We've seen stocks appreciate in value, doubling over and beyond. Bitcoin went from $15,000 in early 2022 to over $108,000 on January 20 this year. While I believe Bitcoin will continue to hold strong, I don't think the same for stocks, except those with the strongest balance sheets. It is gold and silver that I believe are now posed for a historic run, just like the stock indices have done these past 8 years.
In fact, gold has already begun its historic move and has nearly doubled in the last five years, spurred on mostly by central bank buying, which has exceed 1,000 tonnes for each of the last 3 years. The tariffs introduced on April 2 is sure to accelerate central bank gold buying as they continue to diversify away from the U.S. dollar.
Now, we wait and see as countries around the world undoubtedly will reciprocate with tariffs of their own. China wasted no time imposing 34% tariffs and export curbs on rare earth metals. President Trump sent out a message on his Truth Social platform stating, "China played it wrong, they panicked - the one thing they cannot afford to do!".
So if the media thinks the last two days of trading was 'Carnage', then what comes next will likely be labelled 'Armageddon' by them. The smart money understands what is happening and how things are going to unfold. Forbes reported a month ago that 197 CEOs sold stocks recently.
The biggest winner was Palo Alto Networks CEO Nikesh Arora. Between February and March, this CEO sold more than $275 million in stocks. He still has 1.1 million shares. He sold just in time. Of course, the stock peaked on February 17 at $208. At Friday's close, the stock sits at $153. Not implying anything but wow, great timing, eh?
Congrats to him. So where do you think heand those other CEOs are going to park their newfound wealth? Will it be in a declining stock market or failing bank? Will it be farmland? Will it be Bitcoin and or gold and or silver?
My guess? He's going for the gold and probably silver, since it's so bloody cheap right now, along with a handful of Bitcoin. He, along with the wealthy class are gearing up to buy it all! I strongly suggest getting your hands on some physical gold and / or silver as soon as possible before it becomes unobtainium. Add more Satoshis to your wallet if you can. Bitcoin is still the King of Cryptos.
The world is changing before our eyes. Call it a 'paradigm shift 'as the financial and economic world is being completely overhauled. There are going to be big winners and even bigger losers. If you understand what's going on, you stand an excellent chance of being on the winning side.
God speed!
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