My 15-year-old daughter was in full social justice warrior mode. We were in the car after school, and she was ranting about Trump deporting immigrants and banning Muslims. My daughter is something of an artist and a self-appointed protector of the proletariat.
It was the evil Democrat, I reminded her, the bad guy FDR, who tossed 120,000 American citizens in concentration camps for over three years. At the same time, many of their children fought and died for the 442 Infantry Regiment, the most decorated U.S. division in Europe.
Apparently, they had yet to cover that bit in her highly regarded, overpriced school.
But she laughed when I told her my grandparents hated Roosevelt so much they wouldn’t use dimes. “Wouldn’t use dimes,” she repeated with a head shake, just to savor the thought of such profound aggrievement.
My family hated FDR because they were in the firework business, and I’m not sure if it was the Smoot-Hawley trade war, or the Sino-Japanese war, or just the Great Depression that killed their import business from Asia, but it died nonetheless. And on top of it, FDR confiscated their gold just when they needed it the most.
Trade Wars
Things could get bad. Consider the granddaddy of all tariffs, the disastrous Smoot-Hawley Tariff of 1930, which was the biggest trade war of all and sparked the Great Depression.
Despite 1,028 leading economists urging President Hoover to veto the Smoot-Hawley Tariff, he signed it anyway. The economists argued it would raise the cost of living, limit exports, injure U.S. investors, and damage our foreign relations. It did.
Predictably, other countries retaliated, and as a result, world trade shrank some 66% between 1929 and 1934. During that time, annual U.S. exports cratered from $5.2 billion to $1.7 billion per year. The effects of that dramatic loss slammed the American economy with a vengeance. Unemployment reached nearly 24% in just two years… more than 5,000 banks failed… and hundreds of thousands of Americans were reduced to living in shantytowns.
So now here we are today, some 87 years later. And despite example after example of how trade wars ruin the economy, we’re about to suffer yet another one. Just like in 1930, we have economic experts warning our president not to go down this road. Like Hoover, Trump’s not listening.
Unheeded Threats
President Trump is threatening to raise tariffs on nearly everyone across the board, from China to Mexico and even Germany.
Recently, he said the Mexican border wall would be paid for by a 20% import tariff and threatened a 45% tariff with China. This will make the cost of goods go up to prohibitive levels. Top exporters to the U.S. like China and Mexico won’t be able to sell, and we won’t be able to buy. In retaliation, China will stop buying from Boeing (NYSE: BA) and start buying the European Airbus, among many other things.
As a savvy investor, you must position yourself against trying times. Both gold and silver have been — without a shadow of a doubt — the most stable forms of money in all of human history.
Meanwhile, a fiat currency has a 100% failure rate. I’m sure you’ve seen the chart showing the purchasing power of the dollar since the establishment of the Federal Reserve in 1913.
Dollar isn’t worth a dime anymore…
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On the flip side, gold and silver have a 100% success rate.
They have been the default forms of currency for the last 5,000 years of human history. Not only that, but you don’t have to report it, and these precious metals do not generate taxable income until you sell them.
It’s easy to keep your gold and silver in secure, private places, away from the greedy, grasping hands of government.
In my Bubble and Bust Report, we have been giving our readers a number of profitable investments in precious metals. Many of them are up triple digits.
As you can see after last year’s initial run up, gold and silver miners have sold off, bottomed, and returned to a bullish uptrend. Note the higher highs and higher lows since mid-December 2016. That is the definition of a bullish uptrend.
It could be that Trump is bluffing in his trade war, that he is just negotiating from a position of strength. But it could also be that someone calls his bluff. Any hint of a trade war will send precious metals much higher. The smart money is getting in now.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
P.S. I didn’t have space to get into it in this article, but you should also know that due to the way gold contracts are set up, there is far less gold in existence than paper gold sold. So any lurch higher will be followed by massive hoarding of physical gold and a subsequent cycle of gold buying. Please read my free report here.
