How Might Tariffs Impact Gold?
Date Posted: July 13, 2018
Read time: 1 min
Frank Holmes sat down with Vasudha Sharma on Small Cap Power to discuss how gold might react to the newly imposed tariffs on goods between the U.S. and China.
Frank Holmes sat down with Vasudha Sharma on Small Cap Power to discuss how gold might react to the newly imposed tariffs on goods between the U.S. and China. Frank emphasizes that the biggest driver of the gold market is the Love Trade in China and India – the largest sources of demand – where gold gift-giving is considered auspicious. On the other hand is the Fear Trade, which is negative real interest rates and inflation. Frank explains how the massive tariffs could result in higher inflation, which could in turn lead to stronger gold demand, as the yellow metal is often perceived as a safe haven asset.
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The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns.
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
M2 Money Supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds.
