Trump, the Dollar, and Gold

Well now it’s official, DJT doesn’t like a strong dollar. Not that it’s a surprise considering his bizarre obsession with trade deficits but now we have confirmation via the President’s WSJ interview. The implications run right into possible tax reform and the border adjustment tax bandied about. That is because the 20% BAT tax on importers was modeled to be offset by a 20% rally in the US Dollar. And that BAT was forecasted to pay for half of that corporate tax cut.

These comments on the dollar come just days after the President’s subtle endorsement of a border tax of some sort on Fox business. Please square those circles Mr. President.

As for how to trade this, buy gold, the only anti fiat currency that can’t be jawboned.

Here’s what GLD did on the headline:

And the gold miners:

Here’s a 1 year chart of UUP, the dollar etn. it’s breaking below its 50 day moving average and looks to be failing at its downtrend from December highs:

And GLD breaking out in the other direction:

Here is a portion of my latest update on the dollar on the Ideas Page (for members only):

The Dollar
Updated 4/4/17 – The dollar is stuck in this contradictory vortex between the desire on the part of the Administration for a weak currency as expressed by officials on one hand but the possibility of a border adjustment tax being part of broad tax reform which needs a stronger dollar. As I’m most worried about a rising trend in inflation and a Fed that will very gradually respond with hikes, I’m a seller of the dollar.

And gold:

The gold idea can be played via PHYS, SLV and the miner etf GDX.