Dollar devaluation against gold inevitable – Murenbeeld

TRADE WARS

Sharps Pixley/Lawrie Williams/6-26-2018

“‘Students of monetary history should recall that global growth shrank  in the wake of the Smoot-Hawley Tariff Act of 1930, and the US was forced to devalue the dollar against gold in January 1934 with the result that the gold price rose by 70% (from $20.67 to $35.00).’   He goes on to say that, under the current Trump policy, the dollar will inevitably have to be devalued as these tariffs and counter tariffs are followed through to their inevitable conclusion.  A trade war tends to have no winners.”

USAGOLD note:  Murenbeeld’s thinking goes along with our own contention posted previously that the Trump administration is unlikely to stand idly by while other nation states launch competitive devaluation policies that would nullify the effect of tariffs. Any de facto devaluation of the dollar, no matter the mechanisms applied to carry it out, would probably push up the price of gold.

 

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