Conclusion: full article HERE
Lesson #1. Trade disruptions. Global trade and currency markets are heart muscles of the world economy with connecting tissues that extend to interest rates, bond markets, banking, insurance and more. If, for example, Trump initiatives reset trade patterns and exchange rates, you could see a cycle of global actions and reactions that includes some key features of the 1970s and 1980s.
Lesson #2. Powerful forces. Once that kind of megacycle is set into motion, it can continue for decades, and no one can stop it. Our colleague Larry Edelson says it’s the cycle itself that drives government policy, not the other way around. But disruptive policy changes from Washington can certainly play an important role in precipitating a major turn of events.
Lesson #3. Rising prices. One of those major turns could bring back inflation. It may start slowly and may take time to hit with full force. But any major changes that make foreign imports more expensive or weaken the U.S. dollar could be catalysts.
Lesson #4. Gold. Even without much inflation, gold is bound to be among the leading beneficiaries. I repeat: After the Nixon Shock, it surged from $43 to $850 per ounce. An equivalent rise from today’s gold price would take one ounce of the yellow metal to over $24,000. Certainly, no one is predicting anything that extreme. But it just goes to show the power behind the cycle that fueled — and was fueled by — the Nixon Shock.