Judging by his taste in interior decorating, Donald Trump is a fan of gold.
His recent comments about U.S. government debt might turn many investors on to gold as well.
Late last week, Trump floated the idea that if he becomes president, the government might try to make a deal with U.S. debt holders for partial repayment of the money hat the government owes them.
The New York Times quoted him as saying on CNBC, "I would borrow, knowing that if the economy crashed, you could make a deal ... And if the economy was good, it was good. So, therefore, you can't lose."
Bloomberg added that Trump implied "he might use his business skills to reduce America's debt burden by pushing creditors to accept write-downs on their government holdings."
These business skills might include his experience with bankruptcy.
As a businessman, Trump declared bankruptcy four times. He would make a deal when his company couldn't pay back the debt so that he could restructure the business, pay creditors a fraction of what he owed them and carry on doing business.
In Trump's mind, it was a legitimate business strategy, and the only losers would be the creditors and his own credit score.
But in the field of politics and the global economy, it is a whole other story. Trying to run a country in the same way that Trump ran his businesses would be a disaster, not just for the U.S. but for the rest of the world.
In the world of finance, U.S. Treasuries are considered the risk-free asset. This is because they are backed by the government of the world's most important currency.
The U.S. government can raise taxes or print more money if it needs cash to pay its creditors. As a result, the chances of the U.S. government defaulting on its debt have always been considered close to zero.
Because of this, the three-month Treasury bill rate is used as the default risk-free rate when calculating what other investments are worth. T-bills of various maturities are also where people park their money when the economy looks shaky because they are a foundation of global finance.
The idea that U.S. Treasuries are risk-free is one of the most dangerous fantasies in finance. Money can be lost even in risk-free T-bills because of inflation and loss of purchasing power, and there is also a very small risk of default.
But if Trump tries to make a deal on paying back these debts or if as president he were to suggest that he views repayment as optional, the whole world financial order would change.
The New York Times said, "Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low interest rates because Treasury securities are regarded as a safe investment, and any cracks in investor confidence have a long history of costing American taxpayers a lot of money."