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\n<\/p>\n
\u00b7 Agricultural commodities: Fell approximately 30-65% depending on the specific commodity<\/p>\n
\u00b7 Energy prices: Collapsed by over 70% from 1930 to 1932<\/p>\n
Copper<\/strong> saw its price drop from around 18 cents per pound in 1929 to below 5 cents by 1932 \u2013 a decline of over 70%.<\/strong> The collapse wasn\u2019t immediate but accelerated as global trade contracted and industrial demand evaporated.<\/p>\n During the Smoot-Hawley period, comparing gold\u2019s price performance isn\u2019t entirely appropriate as the gold price was fixed at $20.67 per ounce under the gold standard until 1933. However, gold\u2019s purchasing power increased as commodity and asset prices collapsed around it.<\/p>\n While it might sound impressive, the above simply means that while everything\u2019s price decreased, gold didn\u2019t (as it was fixed), so one ounce of gold could buy more things. Seems bullish, but it\u2019s not necessarily such as gold price simply wasn\u2019t allowed to float freely.<\/p>\n Today\u2019s environment differs significantly from previous tariff implementations in several critical aspects:<\/p>\n 1. Debt Levels:<\/strong> Today\u2019s government debt-to-GDP ratios are substantially higher (US over 120% vs. 16% in 1930), potentially amplifying market reactions and constraining fiscal responses.<\/strong><\/p>\n 2.\u00a0Central Bank Tools:<\/strong> Modern monetary authorities have far more intervention capabilities, which could limit downside in both equities and commodities compared to historical episodes.<\/p>\n 3.\u00a0Supply Chain Complexity:<\/strong> Today\u2019s integrated global production networks create greater potential for cascading disruptions, which could lead to wildly divergent outcomes among commodities rather than uniform declines.<\/p>\n 4.\u00a0Market Speed:<\/strong> Electronic trading means market moves that historically took months to unfold may now compress into weeks or even days.<\/strong><\/p>\n Based on historical patterns and current market dynamics, the U.S. Dollar Index is likely to strengthen substantially over the coming months. This counterintuitive strength could persist for 6-11 months despite the seemingly (as described in the mass media) dollar-negative implications of tariffs.<\/p>\n One of the mechanisms behind this projected dollar strength is the well-established \u201cflight to safety\u201d phenomenon, where global capital seeks refuge in U.S. Treasury securities and cash during periods of heightened uncertainty.<\/p>\n Commodities are likely to experience severe declines as tariff impacts cascade through global supply chains and demand weakens. However, the path won\u2019t be uniform:<\/p>\n \u00b7\u00a0Industrial metals:<\/strong> Likely to see the most profound and sustained declines (we\u2019ve already seen this in the two most metals that have most industrial applications: copper and<\/strong> silver<\/strong>).<\/strong><\/p>\n \u00b7\u00a0Agricultural commodities:<\/strong> May experience extreme volatility in both directions as trade flows redirect<\/p>\n \u00b7\u00a0Energy markets:<\/strong> Could see initial sharp declines followed by regional price disparities<\/p>\n As seen in historical episodes, most commodities eventually find support as producers curtail output in response to lower prices, but this process typically takes 8-12 months to fully manifest.<\/p>\n An important pattern worth noting is that during both the 2008 financial crisis and the 2020 pandemic shock, gold bottomed before equities. In 2008, gold found its low in October\/November, while stocks continued declining until March 2009. Similarly, in 2020, gold stabilized in March while broader equity markets remained volatile into April.<\/p>\n This pattern is likely to repeat in the current environment. Once the initial liquidity-driven selling pressure subsides, gold typically begins to function as a monetary safe haven rather than a commodity. This transition tends to occur earlier in the crisis cycle than the equity market bottom, potentially creating a window of opportunity for investors.<\/p>\n Still, the first big move is likely to be to the downside, just like what we saw in 2008 and 2020. The declines in silver and mining stocks (in particular junior mining stocks) were enormous.<\/strong><\/p>\n The escalating trade war between the United States and China (and, in a way, the rest of the world) represents a profound shift in the global economic landscape. While market volatility will likely remain elevated across all asset classes in the coming months, historical precedent suggests that the U.S. dollar may strengthen significantly during this period while commodities experience severe pressure.<\/p>\n For gold investors, understanding these historical patterns provides valuable context for navigating the current market turbulence. While not immune to initial selling pressure, gold has historically found its footing earlier than equity markets during major crisis periods, a pattern worth watching closely as this situation unfolds.<\/p>\n The above gives us great background information for chart analysis. Yes, what happens on the charts is critical, but seeing how given markets relate to fundamental events also provides important clues.<\/p>\n When a given market reacts or doesn\u2019t react to something with the strength that seems normal, it tells us something. One example is when gold stocks are not moving higher while gold is \u2013 it means that the former don\u2019t want to rally further and that declines are coming.<\/p>\n Another way, in which we\u2019re applying essentially the same psychological mechanism is when we\u2019re looking at how the markets move relative to the underlying fundamental changes or news. Are stocks, gold, and other markets moving with the magnitude that \u201cmakes sense\u201d or are they moving too much or too little? This can tell us what those markets really want to do next (and what they will indeed likely do).<\/p>\n In today\u2019s case, this can be applied to the stock market.<\/p>\n<\/div>\n [ad_2]<\/p>\n","protected":false},"excerpt":{"rendered":" [ad_1] \u00b7 Agricultural commodities: Fell approximately 30-65% depending on the specific commodity \u00b7 Energy prices: Collapsed by over 70% from 1930 to 1932 Copper saw its price drop from around 18 cents per pound in 1929 to below 5 cents by 1932 \u2013 a decline of over 70%. The collapse wasn\u2019t immediate but accelerated as global trade contracted and industrial demand evaporated. Gold\u2019s Unique Situation Then vs. Now During the Smoot-Hawley period, comparing gold\u2019s price performance isn\u2019t entirely appropriate as the gold price was fixed at $20.67 per ounce under the gold standard until 1933. However, gold\u2019s purchasing power increased as commodity and asset prices collapsed around it. While it might sound impressive, the above simply means that while everything\u2019s price decreased, gold didn\u2019t (as it was fixed), so one ounce of gold could buy more things. Seems bullish, but it\u2019s not necessarily such as gold price simply wasn\u2019t allowed to float freely. Current Context vs. Historical Episodes Today\u2019s environment differs significantly from previous tariff implementations in several critical aspects: 1. Debt Levels: Today\u2019s government debt-to-GDP ratios are substantially higher (US over 120% vs. 16% in 1930), potentially amplifying market reactions and constraining fiscal responses. 2.\u00a0Central Bank Tools: Modern monetary authorities have far more intervention capabilities, which could limit downside in both equities and commodities compared to historical episodes. 3.\u00a0Supply Chain Complexity: Today\u2019s integrated global production networks create greater potential for cascading disruptions, which could lead to wildly divergent outcomes among commodities rather than uniform declines. 4.\u00a0Market Speed: Electronic trading means market moves that historically took months to unfold may now compress into weeks or even days. Likely Market Outcomes Based on Historical Patterns U.S. Dollar Trajectory Based on historical patterns and current market dynamics, the U.S. Dollar Index is likely to strengthen substantially over the coming months. This counterintuitive strength could persist for 6-11 months despite the seemingly (as described in the mass media) dollar-negative implications of tariffs. One of the mechanisms behind this projected dollar strength is the well-established \u201cflight to safety\u201d phenomenon, where global capital seeks refuge in U.S. Treasury securities and cash during periods of heightened uncertainty. Commodity Market Outlook Commodities are likely to experience severe declines as tariff impacts cascade through global supply chains and demand weakens. However, the path won\u2019t be uniform: \u00b7\u00a0Industrial metals: Likely to see the most profound and sustained declines (we\u2019ve already seen this in the two most metals that have most industrial applications: copper and silver). \u00b7\u00a0Agricultural commodities: May experience extreme volatility in both directions as trade flows redirect \u00b7\u00a0Energy markets: Could see initial sharp declines followed by regional price disparities As seen in historical episodes, most commodities eventually find support as producers curtail output in response to lower prices, but this process typically takes 8-12 months to fully manifest. Gold\u2019s Potential Bottoming Pattern An important pattern worth noting is that during both the 2008 financial crisis and the 2020 pandemic shock, gold bottomed before equities. In 2008, gold found its low in October\/November, while stocks continued declining until March 2009. Similarly, in 2020, gold stabilized in March while broader equity markets remained volatile into April. This pattern is likely to repeat in the current environment. Once the initial liquidity-driven selling pressure subsides, gold typically begins to function as a monetary safe haven rather than a commodity. This transition tends to occur earlier in the crisis cycle than the equity market bottom, potentially creating a window of opportunity for investors. Still, the first big move is likely to be to the downside, just like what we saw in 2008 and 2020. The declines in silver and mining stocks (in particular junior mining stocks) were enormous. \u00a0Conclusion The escalating trade war between the United States and China (and, in a way, the rest of the world) represents a profound shift in the global economic landscape. While market volatility will likely remain elevated across all asset classes in the coming months, historical precedent suggests that the U.S. dollar may strengthen significantly during this period while commodities experience severe pressure. For gold investors, understanding these historical patterns provides valuable context for navigating the current market turbulence. While not immune to initial selling pressure, gold has historically found its footing earlier than equity markets during major crisis periods, a pattern worth watching closely as this situation unfolds. Technically Speaking The above gives us great background information for chart analysis. Yes, what happens on the charts is critical, but seeing how given markets relate to fundamental events also provides important clues. When a given market reacts or doesn\u2019t react to something with the strength that seems normal, it tells us something. One example is when gold stocks are not moving higher while gold is \u2013 it means that the former don\u2019t want to rally further and that declines are coming. Another way, in which we\u2019re applying essentially the same psychological mechanism is when we\u2019re looking at how the markets move relative to the underlying fundamental changes or news. Are stocks, gold, and other markets moving with the magnitude that \u201cmakes sense\u201d or are they moving too much or too little? This can tell us what those markets really want to do next (and what they will indeed likely do). In today\u2019s case, this can be applied to the stock market. [ad_2]<\/p>\n","protected":false},"author":1,"featured_media":42356,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[45],"tags":[],"class_list":["post-42355","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financas"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/posts\/42355","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/comments?post=42355"}],"version-history":[{"count":0,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/posts\/42355\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/media\/42356"}],"wp:attachment":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/media?parent=42355"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/categories?post=42355"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/tags?post=42355"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Gold\u2019s Unique Situation Then vs. Now<\/h2>\n
Current Context vs. Historical Episodes<\/h2>\n
Likely Market Outcomes Based on Historical Patterns<\/h2>\n
U.S. Dollar Trajectory<\/h2>\n
Commodity Market Outlook<\/h2>\n
Gold\u2019s Potential Bottoming Pattern<\/h2>\n
\u00a0Conclusion<\/h2>\n
Technically Speaking<\/h2>\n