With the Fed’s balance sheet still measuring $6.6 trillion, Fed Chair Powell stated balance sheet runoff (QT) may be nearing its end. “Some signs have begun to emerge that liquidity conditions are gradually tightening.” Spot gold set another all-time high this morning ($4,218) in recognition of systemic liquidity addiction.
Former Trump advisor Judy Shelton stated current Trump advisors are “very supportive” of a plan for Treasury to issue Treasury Trust bonds redeemable into physical gold on July 4th next year to mark the 250th anniversary of U.S. independence. By issuing on that date, the US would be signaling the U.S. wants to maintain the dollar as a global reserve currency but is willing to lay down the first marker to establish a level playing field for the global monetary system. China appears to be moving in the same direction, potentially commencing a monetary race of re-linking to gold.
JPMorgan Chase CEO Jamie Dimon joined the growing chorus of U.S. financial institutions recognizing gold as a productive portfolio allocation. “It could easily go to $5,000 [or] $10,000 in environments like this. This is one of the few times in my life it’s semi-rational to have some in your portfolio.” In reference to JPMorgan’s $170M Tricolor Holdings charge-off, Dimon noted, “When you see one cockroach, there’s probably more.”
On Tuesday, the Dow pivoted from a 615-point loss (to close up 203) when U.S. Trade Representative Greer announced progress in bilateral trade negotiations and confirmed a direct meeting between Presidents Trump and Xi was still scheduled.
Euro Stoxx 50 +1.3%, S&P futures +0.6% and Nasdaq futures +0.75%. DXY dollar index -0.2%, spot gold +1.3% and spot silver +2.8% (gold/silver ration at 79.4).
