11 April 2025
A global developed world index showing SP movements Friday 6th through to thursday 10th April.
[End]
For anyone who sold gold on Thursday 10th, yesterday, they might have been reassured to see prices continue to fall, but then horrified as in later trading, prices started to pick up. Time for a lessons learned.
In the immediate market rebound, what we hadn't appreciated was that tariffs were still in place, but only suspended; and that they've been reduced, but not completely, just to 10%; and that China's tariffs were raised to 125%.
So uncertainty remains, and in that uncertainty, gold is the usual refuge.
But there are a few other, longer term things to think about.
It seems to be true that Trump is attempting to rebuild manufacturing provide jobs for his base, the people who are in the bottom 50%, the people who have nothing. If he's thought about this, he must appreciate that that means Make America Productive Again - tariffs could offer a protective shield against competition and allow firms the time to move in to the Rust Belt, "the flyover states", or upgrade their production facilities. But equally, this protection cannot last for ever, as it would weaken the industry - remember, competition drives standards.
But there seem to be a few mistakes or false assumptions in the execution of this plan.
The tariffs are with immediate effect, but where is Walmart and the rest going to find alternative, cheap suppliers? And if they can't, what does that mean for inflation or even for social order, if people can't buy the things they need at a price they can afford?
He's doing this for his base. But recent polls suggest that more than half Americans think tariffs will be bad for the economy and bad for them personally. Maybe the country hasn't bought his plan.
I gather that direct and indirect (eg via Vietnam) imports from China into America account for 3 or 4% of Chinese GDP. Plus with the imbalance being so great, China's sales of goods to America are several times greater than America's sales to China, Trump's minister of finance, Scott Bessent, thinks that this gives America the upper hand in negotiations over a trade deal, and that China will relent, i e China will accept American tariffs, and take off its own retaliatory tariffs against American imports.
But that overlooks that China has absolutely enormous reserves, and that it can relax taxes at home, increase subsidies and take other measures to expand the economy inwards, ie the Chinese consumer will take up the slack and buy all those goods that cannot be exported, keeping the Chinese economy and employment going.
Anyway, the overall trouble is that Trump is a man in a hurry. He's only really got a couple of years because the second half of his term he'll be lame duck as usual, and this is his last term and he wants to make his mark in history.
It can be argued that the plan is a good one, but the timing is wrong. This is a two-term plan, squashed into two years. If a way could be found to slow things down, could the American economy have a better chance of integrating all this change and recovering its mojo?
But even then, it needs capital investment flows into commercial and public infrastructure for the plan to work. And where will this money come from? We just saw the power of the bond markets because yields spiked as us bonds, uncharacteristically was sold off, and this forced Trump to blink first ... never mind the budget deficit the American Treasury has to finance of two trillion a year, Bessent's got 9 trillion of debt to refinance this year 2025 at what he hopes will be lower interest rates.
Given that America has 37 trillion of public debt, we get back to the fundamental problem, which is how to get on top of the debt?
At a minimum, starve the military-industrial complex, put Dr. Ron Paul on a DOGE of the Pentagon... it's the never-ending wars that achieve nothing that account for much of this debt. Hard to imagine.
Tariffs, revalue Fort Knox.... None of this now seems possible, austerity or bankruptcy awaits. Maybe this is the defining truth that has dawned on investors.
Thursday and Friday were sell-offs in the equity markets. Monday and Tuesday were further sell-offs in the equity markets, but but joined this time by the bond markets - yields were spiking, as presumably investors were selling out in order to cover the margin calls on debt they'd used to leverage their bets on equity, causing Tuesday's 3-year bond auction to fail as under subscribed.
This is supposedly what prompted Trump to relax the tariffs, particularly as he has this nine trillion to refinance at what he hopes will be lower interest rates. Four hours after announcing on Truth Social that "this is a great time to buy shares", Trump announced his 90 day reprieve, and stock markets shot up again.
But now, Thursday 10th , it is noticeable that equity markets are coming off those highs, highs which incidentally don't get anywhere near to the position prior to last Thursday 3rd ( "Liberation Day" was the 2nd, recall, VHVG was at 86 on 26th March and 92 on 12th Feb). While gold is rallying to all-time highs as we've discussed.
Let's think a little conspiratorial about this. What Trump wants is crashing equity markets because he thinks that investors will take their money out of equity and put it into bonds, raising bond prices and dropping yields, making it possible for him to rollover the debt at low rates of interest.
What will he get? Absolutely noone knows. UBS did a projection, and there were three forecasts, all wildly apart from each other and from today.
Think like a businessman. When those supposedly 75 countries telephoned Trump, did art-of-the-deal Trump say, "I'll relax the tariffs if you buy my debt"?.
Who knows?
March's inflation report came out at 2.8%, down from 3.2% the previous month - this has got to be good news... hasn't it?
... But then the tariffs weren't in force until liberation day 2nd April and though some respite is offered to those 75 compliant countries, the March figure was still before the tariffs, and tariffs are inflationary. If inflation spikes, will the fed restart QE? If the trade war continues and shuts down part of the world's economies, will that lead to recession or even depression?
Who knows?
When a quant hedge fund, Renaissance Technologies, loses 9% in one month, you know that something is now very different, they will have to throw away their old models. There is absolutely no predicting the Donald. And this is why, as we have been saying, it is best at a time like this to be on the sidelines with any new money you might have.
Conclusion
Buy gold
One Comment
1. Overview and Tone
- The piece reflects high alertness to market behaviour, driven by tariff policy, gold prices, equity shocks, and debt pressures.
- It blends real-time observation (e.g., market moves from April 3rd to 10th) with longer-term systemic concerns (e.g., US debt and capital flows).
- There's a speculative, contrarian streak—notably in the conspiratorial framing around Trump’s intentions.
2. Short-Term Market Dynamics
- The gold price rebound illustrates what markets do best: react to ambiguity.
The initial assumption that tariff tension was easing got overturned by the reality that tariffs remain—just suspended or reduced. - In uncertainty, gold regains safe-haven status.
This fits a classic playbook: when fiat systems look fragile or geopolitics heats up, gold is a flight-to-safety asset.
3. The Trump Tariff Strategy: Rebuilding or Rushing?
- The article makes a key distinction: Trump may be pursuing a genuine industrial policy, i.e. Make America Productive Again.
- Tariffs as temporary shields can work if used to give industries breathing room to invest, reskill, and retool.
- But without infrastructure spending, long-term capital commitment, and a patient timeline, tariffs become economically disruptive rather than strategic.
The article hits the nail on the head: this is a two-term policy squashed into two years.
4. Execution Gaps and Misread Public Mood
- Imposing tariffs “immediately” creates logistical nightmares: where does Walmart, or anyone, find replacements for cheap Chinese goods?
- Inflation risk isn’t theoretical—it’s real, and social tension could follow if prices rise too fast for the public to keep up.
- Polls show more than half of Americans think tariffs will hurt, so Trump may be politically overextended, even among his base.
5. The China Miscalculation
- The assumption that America has the upper hand because of the trade imbalance is simplistic.
- China can pivot: use internal demand to replace lost exports, dig into its $3+ trillion reserves, and cushion exporters via domestic fiscal policy.
- This is not 2008—China is no longer export-dependent, and Trump’s team may be fighting yesterday’s war.
6. Debt, Bonds, and the Bigger Economic Picture
- The article rightly points to the existential pressure of US debt:
- $2 trillion/year deficit
- $9 trillion refinancing needs in 2025
- $37 trillion total public debt
- Bond markets are pushing back—a failed 3-year auction and rising yields are signs that investor confidence is fragile.
This is no longer just about tariffs. It’s about market trust in US fiscal stability.
7. Trump’s Real Game?
- The suggestion that Trump wants equities to fall so investors move into bonds is fascinating—and not impossible.
- Lower bond yields = cheaper refinancing = political win for Trump.
But markets aren’t pawns, and confidence can’t be engineered by political manoeuvring. - Renaissance Technologies’ 9% loss implies model breakdowns across the board. This is no longer a normal market.
8. Inflation, QE, and What Comes Next
- March’s inflation of 2.8% looks decent—but April’s tariffs are not yet baked in.
- If tariffs push inflation back up, the Fed may face a brutal dilemma:
- Raise rates to contain inflation?
- Or resume QE to support markets and growth?
- Either option weakens the dollar and tests credibility.
9. Final Take: Stay in Cash, Buy Gold
- The piece ends with a conservative message: stand aside with new money.
- In a market unmoored from fundamentals and ruled by political unpredictability, this is sound.
10. Conclusion:
This article is a strong, fast-paced survey of interconnected financial risks—tariffs, debt, monetary fragility, political impatience. It sees Trump as both improviser and strategist, but one without enough time, support, or capital.
Its sharpest insight? That the system is now too fragile for shock therapy. America needs reform, yes—but not while juggling inflation, social unrest, and refinancing a mountain of debt.
