If tariffs he wants, well, tariffs he gets, and gold & silver are gonna love it. Here’s why…
Let’s look at the last time the United States imposed tariffs on steel.
That happened on March 5th, 2002 under President Bush.
First of all, notice the impact on the dollar, the stock market and the yield on the 10-year:
Here’s a little more about the Bush steel tariffs from ZH:
In an eerie analogue of what is about to take place, on March 5, 2002 President George W. Bush imposed tariffs as high as 30% on global steel imports.
The temporary tariffs of 8–30% were originally scheduled to remain in effect until 2005. They were imposed to give U.S. steel makers protection from what a U.S. probe determined was a detrimental surge in steel imports, as more than 30 steel makers had recently declared bankruptcy. Canada and Mexico were exempt from the tariffs because of penalties the United States would face under NAFTA. Additionally, some developing countries such as Argentina, Thailand, and Turkey were also exempt.
The response was immediate.
Domestically, some of the president’s political opponents, such as Democratic House Representative Dick Gephardt, criticized the plan for not going far enough. For some of the president’s conservative allies, imposing the tariff was a step away from Bush’s commitment to free trade. Critics also contended that the tariffs would harm consumers and U.S. businesses that relied on steel imports, and would cut more jobs than it would save in the steel industry.
The international response – like now – was more vocal.
Immediately after the announcement, the European Union announced that it would impose retaliatory tariffs on the United States, risking the start of a major trade war. To decide whether or not the steel tariffs were fair, a case was filed at the Dispute Settlement Body of the World Trade Organization (WTO). Japan, Korea, China, Taiwan, Switzerland, Brazil and others joined with similar cases.
In a decisive decision, on November 11, 2003, the WTO came out against the steel tariffs, saying that they had not been imposed during a period of import surge—steel imports had actually dropped a bit during 2001 and 2002—and that the tariffs therefore were a violation of America’s WTO tariff-rate commitments. The ruling authorized more than $2 billion in sanctions, the largest penalty ever imposed by the WTO against a member state, if the United States did not quickly remove the tariffs.
In retaliation, the European Union threatened to counter with tariffs of its own on products ranging from Florida oranges to cars produced in Michigan, with each tariff calculated to likewise hurt the President in a key marginal state.
But it was the market’s response that broke the camel’s back: what followed immediately after the tariffs were announced was a 30% plunge in the S&P 500, a slump in the dollar and a rally in bonds that slashed 10Y yields in half.
After receiving the verdict, both from the market and the WTO, the United States backed down and withdrew the tariffs on December 4, 2003.
Now, everybody is looking at all sorts of things like the dollar and the stock market, but what about gold & silver?
Gold was up nicely on the year in 2002:
Over 2002, gold gained 25% on the year.
But the tariffs lasted most of 2003 as well (ending on December 4th, 2003).
Here’s how gold did throughout the entirety of 2002-2003 (Dec):
As you can see, gold did very well over the two year period.
I know, I typed “sanctions” instead of “tariffs”. My head just came of an article I was working on about sanctions. So please excuse the typo.
And I’ll apologize in advance for the same typo in silver.
So what about silver?
Silver got off to a slow start, but gained more throughout 2003:
Notice the interesting thing, however: At the end of 2003 and into 2004, silver really took off in price.
All that pent up energy is just like we have now in silver.
So let’s not underestimate the power of the tariffs and the ability to move the prices of gold & silver.
If gold rises 45% like it did through the Bush steel tariffs, we are talking about a gold price of $1925.
Right back at all time highs.
The point is there are already so many other fundamental factors which are pointing to higher gold & silver prices.
- New wars
- Surging deficits
- US debt crisis
- Fed changing course
- Housing market crash
- Trade Wars
- Stock market crash
- Dollar weakness
- Bitcoin/Crypto crash
- Bond Market crash
- Gold-backed yuan
- Alternative to SWIFT going live
And that’s just the fundamental factors that came to mind which can drive gold & silver prices higher on their own.
And now President Trump is ready to que the tariffs.
If past is prologue, that’s great news for gold & silver.
– Half Dollar