The Trump Economy

[CPT Savajo]

Originally Posted by Texas Contrarian

Incorrect. I pointed that out in my previous post, which you apparently didn't read or didn't understand.

Recall that the gold price was set by fiat to $35 (by FDR). Americans were prohibited from investing in gold bullion until January of 1975. In late 1974, gold was traded in London and Zurich at prices in the $175-200/oz range. (About 5X the 1930s fiat price established by FDR). Thus, if you loaded up on gold on 1/2/75 and held it until today, you would have have enjoyed roughly a 28X price appreciation (very roughly a 7% compounded annual rate of return.) Certainly not terrible, but nothing to get overly excited about.


On the other hand, the S&P 500 was sitting at just above $70 in early 1975, so today the index is almost 100X that of 51 years ago. And you'd be getting dividend income the whole time as well, while your gold would just be sitting there taking up space in your vault, looking pretty but paying you nothing.

You're incorrect. Gold would easily be much higher if big banks weren't shorting it with paper contracts. You know the game is rigged. The S&P is rigged upwards while physical gold is rigged downward and the riggers seem to be losing control. The real price of gold is well north of $10K, there is no ceiling when you account for market rigging and currency creation into the trillions of dollars. The bottom for the S&P is $0.00 denominated in worthless currencies.

The U.S. dollar was unpegged from the gold price of roughly $42 per ounce (specifically $42.22) when the Bretton Woods system of international exchange completely collapsed in 1973.

5000/$42.22 = 118X return thus beating the S&P 500. If you account for a $200 premium to take possession of 1 oz troy gold the return widens to roughly a 123X return beating the S&P 500. Gold's high of $5600... 5600/42.22 = 132X return in early 2026. Today the USD is completely collapsing, foreign Central Banks hold more gold on their balance sheets than USD's as part of their reserve holdings. Gold always wins!

The S&P 500 is grossly overvalued whereas Wall St. and Main St. have become completely disconnected from reality while gold is severely undervalued, tell'em the rest of the story Tex.

[pxmcc]

^^would be lol..

[txdot-guy]

deleted and moved to Tiny’s “How are we going to pay for all this shit?” thread.

[Precious_b]

Originally Posted by CPT Savajo

Allow me to correct you. You're 0 for 4. The S&P 500 wasn't around in 1792 like you stated. The colonial currency collapsed, the continental currency collapsed, and the Democratic Confederate States of the South collapsed with the USD dying a painful death at an accelerated rate today. Gold won everytime. You forget you're in a manipulated game. The AI that you asked cannot account for market manipulation and outright rigging of commodities markets, which you have today.

Already addressed that.
I'll restate, anybody can exceed the normal growth of an asset if they continually watch the trends. See my paperclip comment.
To throw the $$$ into two different places and watch them, it is 4/4 that sez the one far outpaces the other.
Now, you got 3 other people to argue that with. Especially with donny tauting the market of late.

[Texas Contrarian]

Originally Posted by Tiny

Our politicians, and for that matter the voters, don't have the backbone to see that through.

I agree.

In the nearby thread "How are we going to pay for all this shit?" I posted this:

I don't think most people realize the enormity of the problem.

As you noted, raising all the income tax brackets relatively modestly wouldn't make much of a dent in the deficit.

But raising the capital gains tax rate would make even less of a dent in the deficit. The rate now is 23.8%; increasing it to 28% (which is about what most knowledgeable students believe is the revenue-maximizing rate) wouldn't be likely to raise more than about a penny of every deficit dollar. And raising it to levels much higher than that would actually lower revenue. (See: Policy discussions leading up the the capital gains tax cut of 1978.)

And let's get real here. No one is going to cut spending to any appreciable extent.

Anyone remember all the caterwauling in 2011 when the new Republican House majority wanted to cut domestic discretionary spending by a couple of percentage points? Exploding media heads convinced much of the nation that stuff would start collapsing all across the land if any spending was reduced.

And do you remember what happened in 1989, when Rostenkowski got attacked by a bunch of old people at a town hall-style event when he proposed some very small adjustments to Medicare? They literally chased him into his car!

So, I'm pretty sure we're just going to run humongous deficits until some crisis forces a course correction, which it eventually will.

Unfortunately, we're a nation that's adrift with no serious leadership; acting like an alcoholic who has to "hit bottom," as they say, before seeking treatment.

Then one big question centers around what sort of Fed policy will eventually be called upon to accommodate new debt issuance. I'm not exactly in the "doom scenario" camp, though -- but some people are, as evidenced by all the recent gold evangelism.

To wit:

Originally Posted by CPT Savajo

...A fair price would seem like $100K or $150K an ounce according to experts in the precious metals field...

Huh?? What "experts" have said anything of the sort? The only candidate I can think of who anyone reading this is likely to have ever heard of is Peter Schiff, and no one I know considers him any sort of an "expert" on anything. He's an irrepressible salesman who's been making a very good living peddling what I've sometimes referred to as "doom porn" for many years. Apparently the narrative is that we're about to morph into something like pre-Milei Argentina.

Originally Posted by CPT Savajo

You're incorrect. Gold would easily be much higher if big banks weren't shorting it with paper contracts. You know the game is rigged. The S&P is rigged upwards while physical gold is rigged downward and the riggers seem to be losing control. The real price of gold is well north of $10K, there is no ceiling when you account for market rigging and currency creation into the trillions of dollars. The bottom for the S&P is $0.00 denominated in worthless currencies.

The U.S. dollar was unpegged from the gold price of roughly $42 per ounce (specifically $42.22) when the Bretton Woods system of international exchange completely collapsed in 1973.

5000/$42.22 = 118X return thus beating the S&P 500. If you account for a $200 premium to take possession of 1 oz troy gold the return widens to roughly a 123X return beating the S&P 500. Gold's high of $5600... 5600/42.22 = 132X return in early 2026. Today the USD is completely collapsing, foreign Central Banks hold more gold on their balance sheets than USD's as part of their reserve holdings. Gold always wins!

The S&P 500 is grossly overvalued whereas Wall St. and Main St. have become completely disconnected from reality while gold is severely undervalued, tell'em the rest of the story Tex.

No, I am not incorrect. You need to do a little fact-checking.

First, banks are not “rigging” the market with shorts in an effort to force the price down. Large players run both long and short positions; commercial shorts are mostly hedges against physical inventories or future production and don’t create a one‑way, permanent lid on the price. Over time, those long and short positions shift with the cycle rather than just pushing gold lower.

Second, your reference to the $42.22 price in 1973 was not an "investable" or market-determined price; it was merely a statutory price the Treasury used at the time to value its gold reserves. As an American you would not have been able to buy gold legally at any price, and in fact it was trading in London and Zurich at substantially higher prices at the time of the US $42.22 accounting entry decision. Therefore, you cannot reasonably use that statutory price for your cost basis. (And even if you could, gold would still end up way, way behind, as you can easily see.)

Third, on the earliest date you would have been able to legally buy gold, the price was roughly $180. So each dollar invested then would be worth about $28 today.

Fourth, I pointed out earlier that gold just sits there earning no income, while stocks (most of them, anyway) pay dividends. The price level of the S&P 500 since 1/2/75 has appreciated almost 100-fold. But that's not even the half of it! Suppose that you had reinvested your dividends during this whole journey. In that case, your holdings would have grown roughly 300X.

That's the beauty of compounding over a very long time. Try it, you might like it!

[lustylad]

Originally Posted by Texas Contrarian

Third, on the earliest date you would have been able to legally buy gold, the price was roughly $180. So each dollar invested then would be worth about $28 today.

TC - you lost me on this one. My inflation calculator says you would need $1,029 today to have the same purchasing power as $180 back in 1976.

Gold is now trading around $5,000 per ounce. So gold has outpaced the rate of inflation by almost 5X over this period. If you bought an ounce of gold back in 1976 and kept it in a vault, it's been a decent hedge against inflation.

On the other hand, if you invested the same $180 in the S&P 500 back in 1976, and reinvested all dividends, it would be worth a jaw-dropping $47,078 today. You would have beaten inflation by almost 46 times! And you would have beaten gold by 9 times!

So your point is well taken - stocks have indeed significantly outperformed precious metals since 1976. Not sure where your "worth about $28 today" comes from. Unless you're comparing it to the "mattress strategy" of stashing cash under your mattress, in which case that $180 would today be worth only 1/6 of its value back in 1976 due to the ravages of inflation over the past 50 years.

https://www.usinflationcalculator.com/

https://www.officialdata.org/us/stoc...0&endYear=2026

[sand247]

Originally Posted by Texas Contrarian

No, I am not incorrect. You need to do a little fact-checking.

First, banks are not “rigging” the market with shorts in an effort to force the price down. Large players run both long and short positions; commercial shorts are mostly hedges against physical inventories or future production and don’t create a one‑way, permanent lid on the price. Over time, those long and short positions shift with the cycle rather than just pushing gold lower.

Actually i'd agree with him, the banks are absolutely rigging the market with spoofing, shorts, and manipulation. JP Morgan was fined almost a billion dollars when the got caught doing exactly that.

But, globally silver is in a defecit, has been for years now, so that manipulation is not possible for much longer, scarcity will dictate the price. Gold is simply allong for the ride on this.


https://www.cftc.gov/PressRoom/PressReleases/8260-20

[RX792P]

Originally Posted by sand247

Actually i'd agree with him, the banks are absolutely rigging the market with spoofing, shorts, and manipulation. JP Morgan was fined almost a billion dollars when the got caught doing exactly that.

But, globally silver is in a defecit, has been for years now, so that manipulation is not possible for much longer, scarcity will dictate the price. Gold is simply allong for the ride on this.


https://www.cftc.gov/PressRoom/PressReleases/8260-20

Tried and failed...will we now let it happen?

In the late 1970s and early 1980s, Texas billionaires Nelson Bunker Hunt, William Herbert Hunt, and Lamar Hunt attempted to corner the global silver market. By accumulating vast amounts of physical silver and futures contracts, they drove prices from under $10 an ounce to over $50, before government intervention and rule changes caused a market collapse.
The brothers were found guilty of violating antitrust, commodities, and fraud laws, resulting in roughly $130 million in penalties.

On March 27, 1980, the market collapsed as the brothers could not meet a margin call for over $100 million. The price of silver plummeted, nearly leading to a systemic failure on Wall Street.

[Tiny]

A bright friend of mine follows gold very closely. He notes that holdings of central banks have increased a lot. This is understandable. After the USA and other countries impounded dollar reserves of Iran and Russia, maybe it makes more sense for China to keep reserves in gold instead of U.S treasury instruments or for that matter Euros, Yen or Swiss Francs. He sent me an article the other day about Chinese demand, which is soaring. In the past he said flows into ETF's weren't really what was driving the price. ETF holdings according to the World Gold Council are currently at an all time high, 4145 metric tons. But that's not up much from the previous peak, 3918 tons in late 2020.

I agree with TC, the banks aren't keeping the price of gold down. If we're talking about commercial banks, I can't see the motivation, unless they were ordered to do so by the government, and that hasn't happened. I may be keeping the price down in my own small way though. I'm short 3 contracts, as a hedge against a couple of gold mining stocks I own.

Captain, Trump's policies have if anything boosted the price of gold, and I don't believe that's a good thing. The tariffs and attempts to meddle with the Fed have not gone down well, and that's resulted in a decline in the value of the dollar. When the dollar goes down, gold more often than not goes up. And that makes sense. If you believe there's a good chance he's going to push interest rates down to 1%, considerably below the inflation rate, then gold looks better.

Sand, It's been over 25 years since I've looked closely at silver, but I'd advise not accepting the statistics at face value. I did that years ago, and later the World Silver Council revised their numbers. You have a lot of demand, for jewelry and investment, coming from India, and those numbers at the time I was looking were unreliable. Also the majority of mined silver is a byproduct, which makes counting ounces mined more difficult. Silver at $115 looked way overvalued, but that's easy to say in hindsight.

[Jacuzzme]

General aviation is thriving since the ‘anyone who can afford a private aircraft is satan reborn and should be taxed into oblivion’ attitude is no longer in power. That, lower fuel costs and 0/0 tariffs are a definite boon to the industry.

[pxmcc]

Originally Posted by Jacuzzme

General aviation is thriving since the ‘anyone who can afford a private aircraft is satan reborn and should be taxed into oblivion’ attitude is no longer in power. That, lower fuel costs and 0/0 tariffs are a definite boon to the industry.

why should aviation be exempt from tariffs? i'm against most tariffs, but if it's good enough for the goose, it should be good enough for the gander..

we need to see evs in the aviation industry. that way fat cats can fly guilt-free in their Gulfstreams while the grid hopefully goes not-so-much-carbon, no thx to Trump tho..

the Trump economy, summed up: "It was the best of times, it was the worst of times.."

[Texas Contrarian]

Originally Posted by Tiny

Captain, Trump's policies have if anything boosted the price of gold, and I don't believe that's a good thing. The tariffs and attempts to meddle with the Fed have not gone down well, and that's resulted in a decline in the value of the dollar. When the dollar goes down, gold more often than not goes up. And that makes sense. If you believe there's a good chance he's going to push interest rates down to 1%, considerably below the inflation rate, then gold looks better.

I agree. The gold price spike is widely seen as a big "no confidence vote" on fiscal and monetary policy: First, because the administration and congress act as though deficit concerns should be something to pushed off as far as possible into the future; and, second, because there's real worry about the risk that Trump may succeed in pushing around the Fed and possibly getting the policy rate driven down into the 1% range, which almost everyone thinks would be a very bad idea.

However, note that gold sold off 10+% immediately after Warsh was announced. (He's viewed as less of a Trump "yes-man" than Hassett.)

On several occasions, Trump has said (or at least strongly insinuated) that he's in favor of a weaker dollar in order to benefit exporters. At least, that's the way many observers see it (although you never know for sure, since he so often sounds a bit confused when he starts talking about economic policy considerations).

It's true that central banks, especially in China -- but also in countries like Poland and Turkey -- have been net buyers of gold, especially since 2022, but a couple of investment bank research desks have reported that the pace of accumulation has slowed down, but has not plateaued; and might not for another year or two. Though they are generally at least mildly bullish on gold, one widely followed analyst reportedly said that the last leg-up (to the $5,600 range) had something of a look of "FOMO flavor" about it.

Regarding the aforementioned JP Morgan spoofing matter: That happened some years ago and has nothing to do with price movements today.

Originally Posted by lustylad

TC - you lost me on this one. My inflation calculator says you would need $1,029 today to have the same purchasing power as $180 back in 1976.

Gold is now trading around $5,000 per ounce. So gold has outpaced the rate of inflation by almost 5X over this period. If you bought an ounce of gold back in 1976 and kept it in a vault, it's been a decent hedge against inflation.

On the other hand, if you invested the same $180 in the S&P 500 back in 1976, and reinvested all dividends, it would be worth a jaw-dropping $47,078 today. You would have beaten inflation by almost 46 times! And you would have beaten gold by 9 times!

So your point is well taken - stocks have indeed significantly outperformed precious metals since 1976. Not sure where your "worth about $28 today" comes from. Unless you're comparing it to the "mattress strategy" of stashing cash under your mattress, in which case that $180 would today be worth only 1/6 of its value back in 1976 due to the ravages of inflation over the past 50 years.

Good point -- perhaps it would have been clearer if I'd pointed out that each dollar invested in gold on 1/2/75 would be worth $28 today in nominal dollars; not adjusted for inflation. By the same token, when you said that the same amount of money invested back then in the S&P 500 "would be worth a jaw-dropping $47,078 today," that number was also not adjusted for inflation. Bottom line: Although we generally evaluate investment performance over a long period of time in real terms; for comparison's sake I just did both in nominal dollars here, as you did with the S&P example, and we get to the same ratio either way. Any way you slice it, gold comes up way short -- and that would still be the case if gold rocketed to the Jim Rickards $27,000 price!

Originally Posted by RX792P

In the late 1970s and early 1980s, Texas billionaires Nelson Bunker Hunt, William Herbert Hunt, and Lamar Hunt attempted to corner the global silver market. By accumulating vast amounts of physical silver and futures contracts, they drove prices from under $10 an ounce to over $50, before government intervention and rule changes caused a market collapse.
The brothers were found guilty of violating antitrust, commodities, and fraud laws, resulting in roughly $130 million in penalties.

On March 27, 1980, the market collapsed as the brothers could not meet a margin call for over $100 million. The price of silver plummeted, nearly leading to a systemic failure on Wall Street.

Yes, the events surrounding "Silver Thursday" produced quite a drama!

There was a lot of money in Boomtown Dallas in the late 1970s, to be sure. But the Hunt Brothers were as "big-money" as they come! Herbert was a fairly quiet sort by comparison, but Bunker was going around in Dallas circles telling anyone who would listen that total dollar collapse was imminent and those who owned precious metals would end up having the world by the balls.

Of course, their timing couldn't have been worse.

Just goes to show you that when the FOMO train really gets a full head of steam, the biggest of the big fish can succumb to the lure.

[Jacuzzme]

Originally Posted by pxmcc

why should aviation be exempt from tariffs? i'm against most tariffs, but if it's good enough for the goose, it should be good enough for the gander..

we need to see evs in the aviation industry. that way fat cats can fly guilt-free in their Gulfstreams while the grid hopefully goes not-so-much-carbon, no thx to Trump tho..

the Trump economy, summed up: "It was the best of times, it was the worst of times.."

The power to weight ratio a battery is crap compared to a jet or internal combustion engine. I’m sure you could build something, likely someone already has, that’d fly a few people a short distance but there’s not much point. If you’ve gotta stop and recharge a battery for 3 hours after every 2 in the air, you might as well drive. The technology just isn’t there, and I doubt it will be in any of our lifetimes.

[RX792P]

REBATE?????
White House Senior Counselor for Trade and Manufacturing Peter Navarro

"When Americans get those rebate checks on tax day, that’s going to be the biggest rebate and broad-based in American history,"

I don't think that's a rebate....

And Navarro's other misleading comments about rising real wages (well, 1.4% is 'rising') and the return of manufacturing (Estimated net decline: ~80,000 to 90,000+ manufacturing jobs lost over the course of 2025)

https://www.foxbusiness.com/media/na...-trump-tariffs