On Friday, halfway through the trading session, Trump and the Australian Prime Minister, who has been visiting the White House, were answering reporters’ questions, when Donald was asked a couple of things regarding the trade deal: (1) Is he open for an incremental deal? And (2) does it have to be before the elections?

His replies brought markets down hard and precious metals spiking up. The levels of jittery and frightened investors are just unbelievable. The trauma from 2008 is still well in the hearts of the investment community.

I’ve said it a number of times in recent days and weeks: Smart Money, which manages trillions of dollars for the public via pension funds, insurance, sovereign wealth and corporations, is HYPNOTIZED by this trade war.

What Trump said is that he’s not looking for a step-by-step deal, but for the “Big Deal” and that it does not have to happen before the elections. I wouldn’t expect him to say anything else, since it would imply that America is stressed to make a deal. It’s the same as when a seller calls me about an investment property he wants to unload and I tell him that I’m not going to get rushed and that I’m looking at other properties as well. It’s common sense to look uninterested when looking to set terms.

This heightened level of fear will not remain elevated, unless REAL setbacks occur.

In other words, gold and silver, which have enjoyed tremendous yearly performance, could sell-off hard if we just avoid disaster in the coming months.

Long-term, though, things are looking really good.

Courtesy: U.S. Global Investors

Pierre Lassonde, the billionaire co-founder of Franco Nevada, the largest gold royalty company ever, has personally plotted the chart above.

Using what is now 48 years of historical precedence, under a purely fiat monetary system, Lassonde sees gold prices going to at least $5,000, but more likely $12,500 in the next generation.

The nominal price is not so much the issue here; it’s the growth in purchasing power that is important. In the past year, it has become APPARENT that the official policy of central banks, globally, is to lower rates into real negative territory and keep them there.

In the U.S., this doesn’t mean that we must cut the Fed Funds Rate to zero, but it does mean cutting it even more, so that post-inflation returns would be negative.

Since the FED will likely announce QE and has already announced a permanent Repo operation until October 10^th, buyers will squeeze the FED again and rates will probably go up in the near-term.

This is bad for precious metals, as a general rule. But looking 2-3 years down the road, it is scary to think about how the dollar escapes from a tumultuous decline in relative value.

The combined storms of unfunded liabilities and debt maturities unwinding are precise math and there’s a shit ton of them coming due, starting in late 2020.

FINANCIAL LITERACY 101: YOU’RE WINNING!

The compounded effect of increasing your financial IQ in these times is incredible. By reading these words you are, at the very least, putting yourself in the driver’s seat to generate returns that far outperform the average investor.

Check out this chart:

Courtesy: bourbonfm.com

Nothing could be as PATHETIC as the performance of an emotional investor, who follows his peers and BUYS when there’s euphoria and SELLS when there’s panic.

You can readily see the great lesson in this chart. HOLDING and BUYING more, especially on dips, DIVERSIFYING at all times (since you can never guess REITs would outperform stocks), is the surest way to beat inflation.

Trading in and out is the most heartbreaking and most decapitating activity.

Put a lid, a cap, or a dam over your emotions and operate from a posture of understanding that capitalism works.