Bankrupt the US, Mr Trump, and Watch Gold Fly

Bankrupt the US, Mr Trump, and Watch Gold Fly

Wednesday was the hottest day in July ever in the UK. Have a look at some of the headlines:

Meltdown! Sweltering Britons face chaos…’

Daily Mail

Britain is hotter than SAUDI ARABIA…’


How hot does it have to be to have the day off work?

Birmingham Mail

I love these headlines. The country loses its mind when the temperature rises. I might add that the thermometer topped out at 32 degrees Celsius on Wednesday. To us Aussies 32 is laughable for the hysteria it creates.

When January and February in Oz can see a whole week above 40 degrees, a mild 32 is a walk in the park for us. Still, it’s hot. And the fact it’s a record for the UK is something to consider too.

It’s funny however because, while the major papers (tabloids) bang on about the heat, most of them miss far more important news. Like for instance that the International Monetary Fund (IMF) downgraded estimates for growth in the UK this week.

Or perhaps the fact that the pound is at long term lows against many global currencies.

Or maybe the fact the Bank of England is ready to loosen monetary policy. They have to fight inflation and slow growth somehow.

While the country might be in a heatwave, the economy is close to an ice age. This is a precarious situation for the UK. But there are also positives to take out of all this nonsense.

For example, have you been closely tracking the price of gold? Kitco has Tuesday prices edging higher at US$1,331.90 an ounce. That’s a considerable hike from US$1,050 an ounce late last year.

Greg Canavan, Editor of Crisis & Opportunity, believes the lows of late last year were gold’s ‘41.42 Moment’. Thanks to global headwinds, gold could be in for an epic bull run. With the price of gold potentially skyrocketing, gold stocks could create once in a lifetime opportunities for investment. Greg recently released a special report about why now could be the perfect moment to buy gold stocks. You can read more here.

Part of the recent strength in gold is thanks to the situation here in the UK. But it’s just one of the reasons that are pushing the ‘precious metal’ higher, and higher, and higher.

We’re on the brink of nuclear war, you know?

You only need to cast your eye and any other random country to see other headwinds causing havoc.

There is of course the imminent threat of all-out war. Russia and the US-NATO are in a military standoff in Europe. Make no mistake; this is the closest to nuclear war we’ve been perhaps since the Cuban Missile Crisis in 1962.

It’s also no great coincidence that the two main players are the US and the Russians. It’s also no coincidence the UK parliament just voted on the future of their nuclear missile system, Trident. With a 472 to 117 majority the UK will build four new submarines carrying Trident nuclear missiles. The total renewal cost will be £32 billion.

Then there’s the military fracas in the South China Sea. China’s man-made military islands are now invalid. The Permanent Court of Arbitration in The Hague says so, at least. Of course even with a court ruling the Chinese aren’t about to just leave them be.

They’ve even gone so far as to warn Australia to stay out of it. According to a report in The Australian:

Mr Cong Peiwu, director general of the Department of North American and Oceanian Affairs, at the Ministry of Foreign Affairs, said China was prepared to “take very serious counter measures” if countries like Australia became involved in sea patrols close to the disputed islands “under the pretext of freedom of navigation” exercises.’

This will be test for Australia. Just how much of a lackey are we for China? I guess we’ll find out soon enough.

Then of course there are the threats of terrorist attacks. France, Belgium, Germany, Turkey, Somalia, Israel, and Iraq are just some countries that have seen innocent people die from terror attacks.

And the recent attack in Nice comes just weeks after a propaganda video calling for the same kind of attack in Australia.

Trump bankrupting the US might work out pretty well…for gold

These are all real risks, and the markets know about it. Or so you’d think. The US markets continue to push to new highs even though they’re possibly the most aimless of all countries.

Let’s not forget by the end of the year either (another) Clinton or Donald Trump will be President. Is either a good option? Hell no. But that’s all the US public have got.

Let’s not forget that Trump has seen four of his businesses into Chapter 11 bankruptcy. In business this can often be a smart move. That’s something Trump likes to point out. But it’s only smart if you can save a company that’s already in a death spiral.

Trump calls these bankruptcies a ‘tremendous thing’. Which leaves me thinking with all the debt the US is carrying, maybe a Chapter 11 bankruptcy would be a ‘tremendous thing’ too.

A reorganisation and restructure. Could you imagine it?  What if Trump, as president, decided to bankrupt the US in order to save it? It actually could be the most genius financial move of all time. But it would crash global markets, of course.

The thing is, with his unpredictable nature, it’s a real possibility. And if the US does bankrupt itself and restructure, who’s left to clean up the mess? There would be havoc. And markets would be as unpredictable as ever. But one thing won’t be unpredictable. The price of gold.


Sam Volkering,
Editor, Australian Small-Cap Investigator

Editor’s Note: This article was originally published in Money Morning.

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