Greetings from Jekyll Island, Georgia, where I’m hanging out with the Paradigm Press team. It’s been great to see everyone among the Live Oak and Spanish Moss. Wanna hang out with us?

Then join Jim Rickards and his team of analysts - including me - live today at 2 pm for a deep and wide-ranging conversation about tariffs, Trump’s plan, markets, and monetary policy. Don’t miss this event - there’s no cover charge!

Of course, we’re also talking about gold, which briefly crossed the $3,500 threshold before backing off to a less incendiary level.

Why did gold explode in the Tuesday overnight session? And what’s that got to do with our meetings here? Sit back, relax, and let me regale you.

The Background

I remember The Donald’s victory well. I was jetlagged as hell, watching the election coverage from my hotel room in New York City, when the networks were forced to admit he won a decisive victory. It was a relief to know Cackling Kamala wouldn’t sit behind the Resolute Desk come January, and that Trump would reclaim his rightful place as America’s leader.

Trump’s victory wasn’t just a statement: it was a repudiation of everything that took place in the prior four years. Joke Biden - or his husk - would be consigned to history’s garbage can, where he belonged.

DEI, ESG, and other awful acronyms would follow Biden and Harris out the door. Common sense would reign.

And then The Donald could get to work. With his new Treasury Secretary, Scott Bessent, Trump could stop targeting the stock market as a measure of economic success. The Trump team could work on lowering the 10-year yield. Why do that? Because that’s the base rate for consumer credit cards, auto loans, and mortgages. It would also help to refinance the $7 trillion in UST debt coming due in 2025, which Janet Yellen left for the incoming Trump administration, at a more affordable rate.

To lower the 10-year yield, Trump would announce wide-ranging tariffs. They would bring down the stock market, with those proceeds used to buy Treasury bonds in a flight to safety. For the first couple of days, the plan would work. The 10-year yield dropped to 3.85%, which was a good start, but far from their supposed target of 3%. But instead of continuing its downward trajectory, the 10-year yield rebounded and now sits at 4.40%.

Rumors abound that former Bank of England Governor and current Canadian Prime Minister Mark Carney coordinated a dumping of UST bonds with his old friends in Europe. That’s right, it probably wasn’t the Chinese, who’ve already unloaded much of their UST holdings due to fears of sanctions. It was America’s allies who did the damage.

But was it Carney’s doing? Or did Trump miss a vital trick?

Stakeholder Management

While we Trump fans were celebrating in the end zone, we overlooked a critical aspect of leadership: stakeholder management. In plain English, stakeholder management ensures that everyone with a stake in a plan agrees to move forward with it. And there’s one critical person The Donald almost certainly didn’t talk to about his tariffs and 10-year plan: Federal Reserve Chairman Jerome Powell.

Why would talking to Powell be so important? It’s simple. 85% of all moves in the yield curve are parallel moves. That means if Jay Powell and the Fed cut, say, 50 basis points (0.5%), the 10-year yield should drop by roughly 50 basis points. It’s not a guarantee, but the Fed’s help could’ve gone a long way to helping The Donald accomplish his goal.

But that conversation never happened because Trump didn’t think he needed Powell. And since the plan to reduce the 10-year yield to 3% has failed, maybe he indeed needed Powell’s help more than anyone else’s.

The conversation could’ve gone like this:

Don Trump: Jay, I’m going to make you an offer you can’t refuse. Meet my new BFF, Scott. He’s going to run Treasury. We want to let you in on our plan.

“Feddo” Powell: Oh yeah, what’s that?

Don Trump: I’m gonna tank the stock market to get investors into the bond market to lower yields.

“Feddo” Powell: Whatta you nuts? You can’t do that!

Don Trump: If I don’t get those yields down, we can’t refinance that $7 trillion turd Dopey Janet Yellen left on our doorstep. And these kids will never be able to buy a house or a car. I’ve gotta help them.

“Feddo” Powell: The market will never go for it.

Don Trump: That’s where you come in. If you cut rates while we do this, the entire yield curve should move down. The Fed regains credibility, and the market knows you’re an important part of the team.

“Feddo” Powell: Why should I help you? You constantly mistake me for a Twitter urinal. You insult me like I’m chopped liver.

Don Trump: Well, if you do this, and it works, I can see my way to offering you another term at the Fed. And I promise to say only nice things about you (fingers crossed behind his back).

“Feddo” Powell: Shall we say 50 bps, Don?

Of course, Powell might have told Trump to piss off and that he was nuts and that he wanted no part of this idiotic plan.

But Trump didn’t even try, and now we have to deal with the repercussions.

What’s Next?

Gold briefly topped $3,500 on Monday night before falling back below $3,400. Moves like that happen when the world’s panicking. Is Trump fully in charge of the situation? Is the Fed still relevant? What will they do next?

With volatility like this, we could easily see gold fall back down below $3,000, perhaps even to $2,800. Gold, silver, and gold and silver miner investors must hang on. This rally is only just beginning. There will be trying moments. Stay strong.

I reckon gold will hit $4,000 by year’s end and $10,000 within the next five years.

Reforming the monetary system is hard: there will be considerable volatility along the way.

Wrap Up

Trump’s plan failed because he omitted a key member of his team from his briefings. Now, we’re dealing with the consequences.

Gold and silver will continue to rise, but the journey will be bumpy.

The Chinese say, “May you live in interesting times.”

But those interesting times are fraught with danger. It’s critical to weather the storm as stoically as possible.