Gold Is on the Ballot
Alex Kimani

A reader recently asked me which presidential candidate would be more bullish for gold.

That one’s easy. Kamala Harris.

A President Harris administration would preserve and strengthen the status quo. To start with, we’d see a continued bonanza of bad regulation, spending and taxes. Add in poor capital allocation and misaligned incentives, and we have a recipe for stagflation and reckless monetary policy.

But an often-ignored catalyst for gold is U.S. foreign policy.

Under President Biden and VP Harris, world stability has deteriorated. Nations are lining up in two distinct blocs, not dissimilar to the buildup before World War II. Military tension hasn’t been this high in many decades.

Biden and Harris have also greatly accelerated the weaponization of the dollar. Sanctions and financial warfare have become the de facto levers applied to protect U.S. national interests (real and perceived).

The ongoing shift away from dollar assets is directly tied to the Biden administration’s seizure of Russian assets following Putin’s invasion of Ukraine in 2022.

Every leader around the world is left pondering how safe their own assets are from the long arm of Uncle Sam. If Russian central bank funds can be frozen, and even stolen, theirs can be too.

Russia is taking full advantage of the situation. They’re leading the BRICS’ efforts to de-dollarize international trade, and progress is being made. We’ve backed the country into a corner and given them no other choice. And sanctions have not hurt the Russian economy as badly as the West had hoped.

This weaponization of the dollar is directly fueling the bull market in gold. Central banks are increasingly moving their reserves away from U.S. government securities and into gold. This short-sighted foreign policy is imminently hazardous to the dollar’s status as a reserve currency.

Meanwhile, Donald Trump has stated that he will minimize the use of sanctions and end the weaponization of the dollar.

In a recent discussion at the Economic Club in New York, Mr. Trump noted that during his presidency, he only used sanctions in a limited fashion because abusing them “kills your dollar and everything it represents”.

Former President Trump went on to say that the dollar losing its place as world reserve currency “would be the equivalent of losing a war,” and could “make us a third-world country”. He understands what is at risk today.

President Biden and VP Harris have shown zero awareness of this problem. They’re playing a dangerous game and appear to be unaware of the consequences of their actions. The nation is stumbling towards disaster.

President Trump is the only candidate who can at least slow the dollar’s erosion and minimize the financial impact on Americans.

The trend of de-dollarization isn’t going away, but decisions made by the US president over the next 4 years will largely determine the fate of the dollar. We’ve reached a critical financial crossroads.

Outlook for Gold is Bullish Regardless

Even if a Harris administration would be better for gold in the short-term, gold will continue to do well no matter who wins the election.

Debts and deficits around the world have simply grown too large. A hard landing is inevitable, but effective management of the crisis will be key to preserving Americans’ quality of life.

A wise president would slow the trend of de-dollarization with common sense policies. They would stop using the dollar as a crude tool to achieve foreign policy objectives. They would cool global military tensions and ease back from our dangerous trajectory. Right now, the Biden/Harris team continues to climb the escalatory ladder with no end in sight. Nuclear war, anyone?

This would at least reduce the urgency of the global flight out of the dollar.

Under President Harris, however, the situation could easily spin out of control. Yes, gold would likely soar. A bull market driven by conflict, out-of-control inflation, and rapid de-dollarization.

Trust me, that’s not the type of bull market we want to see.

The negatives in such a scenario far outweigh the benefit of gold ascending more quickly. A forecast of stagflation with a high chance of a dollar crash would be nothing to look forward to.

So, to answer the reader’s original question, Kamala Harris would almost certainly be more bullish for gold. But it would be bearish for the United States in every other way imaginable. A poor trade-off.

Remember, the purpose of gold is not to make us rich. It is to preserve our wealth during times of chaos. And gold will continue to play that role no matter who wins the election.

 

James G. Rickards is the editor of Strategic Intelligence, Project Prophesy, Crash Speculator, and Gold Speculator. He is an American lawyer, economist, and investment banker with 40 years of experience working in capital markets on Wall Street. He was the principal negotiator of the rescue of Long-Term Capital Management L.P. (LTCM) by the U.S Federal Reserve in 1998. His clients include institutional investors and government directorates.

His work is regularly featured in the Financial Times, Evening Standard, New York Times, The Telegraph, and Washington Post, and he is frequently a guest on BBC, RTE Irish National Radio, CNN, NPR, CSPAN, CNBC, Bloomberg, Fox, and The Wall Street Journal. He has contributed as an advisor on capital markets to the U.S. intelligence community, and at the Office of the Secretary of Defense in the Pentagon. He has also testified before the U.S. House of Representatives about the 2008 financial crisis. 

Rickards is the author of The New Case for Gold (April 2016), and four New York Times best sellers, Currency Wars (2011), The Death of Money (2014), The Road to Ruin(2016), and Aftermath (2019) from Penguin Random House. And his latest book, The New Great Depression was published in January 2021.

 

 

 

 

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