As Trump Returns to the White House

27 Jan

As Trump Returns to the White House

January 21 was the first full day of the second Trump presidency.  Appearing on CNBC on Trump’s first day, billionaire hedge funder Stanley Druckenmiller investor said the US is shifting from “the most anti-business administration” in history to the most business-friendly administration. 

Gold gained more that 50 percent in the first Trump term.  We expect it to do at least as well in the second.  In fact, it doesn’t really matter who is president; gold goes up in either case.

As you can see, the Biden years have been stellar years for the gold market.  Gold outperformed all other asset classes in the last two years.


Here are charts of both gold and silver prices for the entire four years of the Biden administration:


The Biden term saw the worst inflation in over 40 years.  The cumulative inflation measured by the CPI since Biden’s inauguration January 2021 is 21.8% and core CPI is 23.5%.  This chart displays the falling purchasing power of the US dollar during the Biden years:


No one should be surprised to learn that inflation is now giving way to reinflation, with the CPI rising month after month again:

Higher gold and silver prices are baked into the cake going forward because the debt that will drive them has already been created.  The money has already been spent and can’t be unspent.

What money is that?  The federal debt.  Washington’s red ink.    

As Trump returns to office the US is awash in $36.2 trillion dollars of debt.  It has no means of paying that debt back.  In the just-ended calendar year 2024, the deficit was $2 trillion dollars.  In the first three months of the current fiscal year 2025 (Oct., Nov., Dec.), the Congressional Budget Office pegs the deficit at $710 billion.  Uh oh!

Furthermore, we are in an environment of rising interest rates, despite the Federal Reserve’s efforts.  Since September, it has been attempting to manipulate interest rates lower.  

It has failed.  Interest rates have risen.  Here is a chart showing the 10-year US Treasury rate rising during the period the Fed has been trying to push rates down:

Of course, as interest rates on its $36.2 trillion debt rise, Washington has to pay more and more to borrow money.  That interest expense has exploded already.    on US debt has approximately doubled in the last three years. When we say it is staggering, we mean to be taken literally.  You can only load so much weight on even a championship runner.  

It is beyond a mess.  It is a doom loop.   And all politicians know how to do is to raise the statutory debt ceiling.  That will happen soon.

A rising debt ceiling is highly correlated with rising gold prices.