Commodity Reaction to Trump's Tariffs: Gold Up, Everything Else Down


Gold reversed strongly and bond yields continued to plunge when Trump announced a 10% hike in tariffs on China.

Gold Reversal

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Gold was already strengthening and bond yields sinking on ISM data, then surged when Trump announced tariffs.

For the bond yield picture, please see Bond Yields Crash On ISM Report, More China Tariffs: Inversions Strengthen.

Soybeans down 14.75 is a definite "win" for Trump. What else could it possibly be?

Mike "Mish" Shedlock

Comments (26)
No. 1-8

DT hates those Chinese with a passion lol,even Reagen didn't hate the soviets the way Mr T hates those Chinese slave masters.Problem is economy too far gone,too diseased by all the money printing to recover,only possible hope is to destroy China (literally)1000% tariff on all there cheap junk. Destroy the chicom slave state once and for all.


Would this have anything to do with soybeans?

Almost half of all Chinese hogs were infected/destroyed with swine flu.

The Chinese feed their hogs soybeans.


"one way or another" , Trump (Mr leverage) will get additional rate decreases.


The whole debt binge that is the G7 is doing the exact same thing, and getting the exact same results.

Debt is the problem. Too many people living beyond their means. A billion Chinese now want to live beyond their means "like everyone else", and the G7 is saying "no, only we get to do that".

Mish has a wicked case of Trump Derangement Syndrome. He used to look at the big picture macro economic trends -- the ones that are happening throughout the G7. Now he seems content to whine about Trump. I know Mish is smarter than that, but here we get yet another post about Trump Trump Trump... and he doesn't connect the dots on the bigger picture.

The G7 has been over-promising for decades. That was already a problem before Trump threw his hat in the ring, and it will be a problem long after he leaves office in 2024 -- even if one hates Trump, none of the 20+ clowns currently in the Dem primary are even connected to reality. Saying Trump is a shoe in 2020 is not a compliment to Trump, its a recognition that Dems are so far off the rails that Al Sharpton was trying to talk some sense into them -- and Sharpton is a low life street hustler.

Too much debt. Too many empty promises that cannot be kept. True in Italy, where political outsiders agreed on little except that Brussels has to go. True in Germany where voters got tired of Merkel screwing Germany to help Brussels. True in England where they voted to Brexit. True in France where yellow vests continue to protest in spite of how much Macron loves Brussels. That's four for four EU anchor economies... Japan's useless politic has been pushing QE/ZIRP for 30 years. Japan has no solution. And neither does ECB or Fed.

And then there is the mess of Canada. They signed the Kyoto accord and then changed their minds when they realized how much their "free" healthcare depends on crude oil and nat gas royalties. And now the native Canadians (whatever native American / indians are called when their reservation is in Canada?) have decided they won't let Quebec have all the royalties. Will Canada double taxes and keep spewing carbon? Will Canada stop oil production and quintuple taxes (HA HA HA!!)? Or will Canada terminate their "free" health system for the little people? Canadian politicians go south to the USA for immediate care, they don't wait in line like common citizenry.

Too much debt. Too many promises. Too much government corruption. Its the same problem all over the G7. And now... too many self proclaimed "intelligentsia" so clinically obsessed with Trump that they can't think straight.


It' s obvious, one doesn t have to be a pundit to observe and realise that the Sapiens Ape's dramatically overpopulated globalised system created a unsustainable and practically irreversible mess, a irresolvable financial cesspool and, which is worse, a enormous ecological disaster, neither should we underestimate the increasingly dangerous geopolitical situation especially with a crumbling, armed to the teeth US empire ! Well, at least we had a good time in la-la land for a while, big question remaining when(not if) and how it will end...


The comments are hilarious!


Is my basic reasoning on this correct?

  1. World economy slows down which prompts large scale buying of ‘safe’ bonds

  2. demand for bonds is such that yield drop, then turn negative

  3. Negative rate bonds become more common place, so that even junk rated bonds start to have a negative yield

  4. Many of the purchases are by ‘forced’ buyers, such as pension funds, who have a mandate to buy ‘safe’ bonds

  5. BUT, negative yielding bonds means over time, the principal is reduced (or in the case of junk probably lost entirely), so pension funds gradually have less and less money to pay out what was promised.

  6. Either you are forced to raise more from new investors (hiking insurance premiums, more taxation) or you reduce pay-outs for existing pensioners/investors

  7. this is deflationary as it takes money out of circulation

  8. this forces central banks to ease even more in order to create inflation, but lack of good investments takes you back to point 1

Have I got this right? If we are in a vicious cycle of central banks attempting to force inflation vs the behaviour or markets?


While gold was up strongly, the gold miners don't believe this move upwards. I have found any move by gold that the miners don't support is just temporary.

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