Gold is trading solidly above the $1500 mark at the time of writing, and I believe we are only just getting started. The currency wars are back in full swing, and they will be more intense than ever.
The United States government, ironically, labeled China a currency manipulator for the first time since 1994, marking a severe uptick in their rhetoric against the Chinese government, as the trade wars continue to spiral out of control with seemingly no end in sight.
Many simply waved this move off as nothing more than what it initially appeared to be: jawboning with no true ramifications behind it. However, others see it as a blatant threat by the U.S. administration against China, as the last time this language was used twenty-five years ago was when China was placed on a currency blacklist.
Some were surprised by this move, as they see it as an overreaction, fearing that we have now moved into another phase of the ongoing currency wars that have bubbled behind the scenes for years—currency wars that are now in plain sight for all to see.
Unfortunately, this should come as no surprise to anyone, as President Trump stated back in 2016 that he fully intended to label China a “currency manipulator”, a statement that was laughed off until now.
This move comes on the heels of a Fed interest rate cut in which the Fed Chief, Jerome Powell, lowered rates by 0.25%, citing fears of a weakening global economy and ongoing trade wars.
Of course, China is far from the only currency manipulator in the world, as countries are constantly “racing to the bottom” in an attempt to lower the value of their currencies. This increases their competitiveness on the international markets by artificially making the prices of their goods lower.
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