Tariff Tensions, Fed Faceoff Fuel Surging Gold

MIKE BARNES 0:14

Welcome to Breaking News with U.S. Money Reserve. My name is Mike Barnes. I am your host. Joining me now, Philip Diehl, 35th Director of the United States Mint and President of U.S. Money Reserve. Philip, glad you are here. Thank you, Mike. Also have Brad Chastain, Vice President of Retirement Education at U.S. Money Reserve. Glad to have you as well, Brad. Great to be here. Thanks for having me. Gold prices continue to go up and up and up, setting records. And a lot of people want to know why. Philip, I want to start with you. Is tariffs, is that a big reason why things have changed?

PHILIP N. DIEHL 0:52

Yes, absolutely. Tariffs are at the heart of the matter. Of course, here over the weekend, uh, really the last 24 hours, we’ve seen about a $100-107 increase in gold prices and tariffs and the escalating tariff war that’s going on between the United States and China, or is one of the two factors driving it this week, early this week.

MIKE BARNES 1:19

Brad, do we as investors, as people who are going to have to retire someday, do we need to keep our eyes on this and figure out if we need to move into gold or not miss the boat, so to speak?

BRAD CHASTAIN 1:31

Well, we believe that at all times, regardless of what’s going on out there in the world, gold plays an important part in someone’s asset allocation as a part of their portfolio. Because while we have a good idea of what’s going on right now and there’s a lot of uncertainty, there’s also a lot of surprises that happen. And gold is always an integral part of diversifying a portfolio to help protect against those surprises. This is just bringing it more into the forefront of many people’s minds that they really should have the right kinds of protection because they see these risks right in front, but that never changes.

MIKE BARNES 2:05

Is there a ceiling for the price of gold, for the value of gold? Because I’ve seen some reports it could go over 4,000 before we know it. What do we know about the future?

PHILIP N. DIEHL 2:15

Well, one thing that we know is that when we started this year, four months ago, the general consensus was that gold would top out at about $2,500 an ounce. My own estimate was closer to $3,000 an ounce. And all of those estimates have been blown past. And we’ve seen a constant parade of major analysts increasing their forecast for gold by year in. Well, now here we are at uh over $3,300 an ounce, and we’re seeing some of the major forecasters like uh like uh Goldman Sachs that are saying that we could see prices as high as $4,500 an ounce by year in. But I don’t think anyone knows at this time because we have a perfect storm of forces that have aligned to drive gold prices. It’s really remarkable. It’s not just one or two forces like what we had in the 1980s uh or uh like we had in 2020. We have probably a half dozen forces that are aligned and look like they will continue to be aligned to drive gold prices upward for the foreseeable future.

MIKE BARNES 3:34

Brad, I like that the description that Philip used, a perfect storm. What do we need to keep our eyes on as investors?

BRAD CHASTAIN 3:42

Yeah, I think uh one of them is just the direction that the world is moving in general. You know, the the sort of rules for how we allocate portfolios in the past don’t necessarily work for what’s coming ahead. Portfolios are built around, you know, the last hundred years of history, where the United States was establishing its dominance, the dollar becoming the world’s global reserve currency, and we ran perpetual deficits as well, where we sent dollars overseas, dollars came back into US assets, driving U.S. stock market, as well as funding the treasury market as well. So traditionally, that 60-40 stock bond portfolio that so many people talk about that had worked well in the past uh suddenly looks quite different in the future in a world where perhaps we aren’t running as large of trade deficits. That’s stated policy objective for President Trump to balance those deficits. So if we’re not sending as many over dollars overseas, there’s not as many dollars to come back to support treasuries and U.S. stock markets with fewer dollars overseas. More people are going to be looking for other ways to transact and conduct business as well. And there’s not a lot of other great alternatives out there, let me tell you. So it’s not like everybody’s rushing to the Euro all of a sudden or to the to the yen or to the certainly not the Chinese Yuan. Gold has been a monetary store of value for uh thousands of years. And so you see it taking a more of a prominent role in central banks’ balance sheets, the way governments look at it, as well as individual investors as well.

PHILIP N. DIEHL 5:21

I think Brad makes a really important point here I want to hit on again, and that is really, I think the day of the 6040 um diversification of portfolios is dead. And if you have any doubt about it, if you have a 6040 uh portfolio right now, look at what both of those uh allocations have done for you. We’re seeing this very unusual situation in which it used to be that there was this seesaw between values of stocks and bonds. But those of us who have been invested in both have seen that both are going down. They’re correlated now. And uh so, in order to balance a portfolio appropriately, you need to have an asset that offsets those losses when they occur. And gold has consistently been the reliable asset class for accomplishing that balance in a portfolio in which the other major classes are decreasing in value.

MIKE BARNES 6:28

Well, if I’ve been one who has lived off of that 60-40 split and believed in that, who do I need to talk to today to figure out what my split should be?

BRAD CHASTAIN 6:37

That’s something our team here is more than happy to help with, of course. We help folks acquire physical precious metals that they can take and store at home on their own. We also help people diversify their retirement portfolios. Many people don’t realize it, but you can actually own gold, physical gold, not pieces of paper or claims on gold, within a retirement account. So we help folks diversify their existing 401ks and IRAs by rolling a portion of that over into physical gold. And it maintains all of its tax benefits as well, just like it always has.

PHILIP N. DIEHL 7:11

Yeah, that’s and I want to I want to emphasize this this point as well, the bread is made. And and that is those of us who have 401ks and uh IRAs who uh who have watched their nest egg dwindle in value here over the course of this year so far, so many people are not aware that you can roll over all or a part of your uh your IRA into a gold, a self-directed gold IRA, and make gold a part of your IRR IRA portfolio. And as a matter of fact, in the last several days, I’ve had telephone calls from relatives of mine who have said, you know, I think I gotta ought to get heavier into gold. I own some gold, but I want to see what I can do to transfer some of my IRA into into gold. And so um I’ve uh you know, I’ve directed them to the right people at U.S. Money Reserve to talk about that. And I really encourage people who are concerned about the status of their IRAs to take a look at rolling over part of it into gold.

MIKE BARNES 8:28

And it doesn’t matter whether it’s a normal IRA or a Roth IRA, either way, U.S. Money Reserve can help.

PHILIP N. DIEHL 8:35

That’s right. Absolutely.

MIKE BARNES 8:38

You know, a lot of us remember back, what, 25 years ago during the dot-com boom when a lot of stock prices went up and up and up. It’s different here with gold because it doesn’t have the the volatility, I think, that that dot com did because now it’s it’s pretty safe, correct?

BRAD CHASTAIN 8:56

It is, it’s very different. And it’s also the fundamentals of it are quite different as well. The dot com everybody remembers as being a bubble. People were putting money into companies that were not profitable at the time and never were going to be profitable, and eventually that simply has to come to an end. Some companies that were profitable eventually became worth a lot of money that had real fundamentals. But at that time it was difficult for people to sort through what was what. And gold has always been a hedge against debasement of currencies. When currencies lose their values, gold is always there. And that is that trend is not slowing down. As long as the global debt situation continues to get worse, debt keeps growing, there has to be more and more currency debasement as more and more money has to be created to be able to service those debts as well as all of the interest on those debts. And the more we see that, and uh gold is gonna continue to perform, and that’s gonna be for a long time to come, because nobody has a fix for the world debt situation.

MIKE BARNES 10:05

Well, that ties into my next question, Philip, for you is the fact that that a lot of people may think, oh, I missed out because I haven’t invested in gold yet. And look at how much it’s it’s gone up and up and up, and oh, it’s too late now. But that’s not the case because there’s a good chance it’s gonna keep going up.

PHILIP N. DIEHL 10:22

Yes, I do expect it to continue rising, and not just for the next several weeks or months, I think for the foreseeable future, because this alignment of these big forces, worldwide forces, that are driving gold prices and have been driving this bull market rally for the last 18 months. Their geopolitical uncertainty began this rally with uh the Hamas attack on Israel. And we know that that war and the rumors of war and fear of war has only escalated over these last 18 months, not only in Europe and the Middle East, but increasingly with China in the South China Sea, um, and especially in the Middle East with growing tensions with Iran. Um and then we’re seeing greater economic instability in the world centered around the tariff war that’s going on right now between the United States and China spilling over into other countries. We’ve just, one of the big things that happened this weekend was uh China pushed back on the U.S. escalation of the trade war, in which China is accusing the U.S. of trying to arm twist other countries into joining the U.S. uh effort against China. And China is saying we’re not going to put up with that. We’re gonna punish countries that uh that joined that effort. And so that’s a whole new front in this uh tariff war. And so the market really reacted to that. I I think after having a quiet three-day weekend, the markets were hoping for a nice quiet Easter Monday. And as of last evening, that was clearly not going to happen. What with the rhetoric around China, but also the increasingly intense rhetoric out of the White House about uh Jay Powell and whether or not he should serve out the rest of his term as chairman of the Federal Reserve. And I think both of those things have really shaken the market up uh this morning and are likely to continue to be uh influential in all markets, not just the gold market, but in stocks and bonds uh and not just in the US but around the world.

BRAD CHASTAIN 13:00

I think that’s a really good point, um, not just around the world, because the dollar is still the centerpiece of the world’s financial system and global markets. And what happens to the dollar and its stability, it ripples throughout the world. And Fed independence, which has been always such an important aspect to the stability of the dollar and trust that foreigners have in the United States financial system, that the monetary system can’t be politicized like it is in so many other areas of the world where there is less trust for the currency. That is something that um it really feels like it shook the markets a lot this weekend, for sure.

MIKE BARNES 13:45

Great information and great advice. Philip Diehl and Brad Chastain, thank you both so, so much. Thank you, Mike. Thank you so much, Mike. Again, my name is Mike Barnes. This has been breaking news with U.S. Money Reserve.