EXPLAINED: Trump Just Crashed Gold, Silver, & Bitcoin

Gold and Silver Price Crash Triggered by Fed Appointment [0:00]

• Gold and silver prices have seen their steepest decline in over a decade, and Bitcoin prices have also been heavily impacted.
• This market reaction is primarily due to President Trump's announcement of Kevin Walsh as his nominee for the Federal Reserve Bank chairman.
• Investors typically flock to assets like gold as a hedge when they are concerned about the U.S. dollar's value or rising inflation.

"When you buy gold, it just sits there and looks back at you. So, it's like insurance. It's a hedge."

The Federal Reserve and Its Role in Economic Policy [0:14]

• The Federal Reserve Bank is the central bank of the United States, responsible for setting economic policy, including interest rates and money printing.
• Despite its name, the Federal Reserve is not a part of the U.S. government.
• President Trump has been vocal in his criticism of the Fed, advocating for lower interest rates and more stimulus, which the Fed has largely resisted.

Kevin Walsh's Nomination and Market Interpretation [0:43]

• Jerome Powell, the current chairman of the Federal Reserve, has a term expiring in May 2026. President Trump's announcement concerns his replacement.
• The nomination of Kevin Walsh is seen by investors as a move towards stability and a preservation of the dollar's value.
• Walsh's previous experience at the Federal Reserve, particularly during the 2008 financial crisis, and his past advocacy for higher interest rates and avoiding inflationary issues, are viewed positively by Wall Street.

"What investors are saying is that he is a more level-headed person. He's not somebody that is a crazy person that would just come in and just stimulate stimulate stimulate and destroy the value of the dollar."

Historical Performance of Gold as a Hedge [01:39]

• Over the last five years, gold has outpaced the stock market, and silver has even outpaced gold, which is considered unusual.
• Historical periods where gold prices surged relative to the stock market include the Great Depression, the early 1970s stagflation, the dot-com bubble burst, the 2008 financial crisis, and the post-pandemic era.
• Such patterns indicate investor concern about the dollar, inflation, and the broader economy.

Drivers of Gold and Silver Demand [02:20]

• Concerns about the dollar stem from significant government spending, which necessitates money creation that can devalue the currency and cause inflation.
• Foreign countries, including China, Poland, and Turkey, have been increasing their gold reserves.
• Uncertainty surrounding the Federal Reserve's future direction, fueled by President Trump's public demands for extremely low interest rates and a less independent Fed, has also driven demand for gold.

"All these things create uncertainty and it created concerns about what's going to happen to the dollar because investors essentially were saying if we have now a new leader at the Federal Reserve Bank and they do what President Trump says and they really work to weaken the dollar and they are going to flood the economy with more dollars, we're going to have a dollar crisis and that means we need more gold."

Kevin Walsh's Stance and Investor Relief [03:43]

• Kevin Walsh's nomination provided a sense of relief to investors, as he is perceived as someone who would protect the dollar's value and the Fed's independence.
• Unlike President Trump's calls for a weaker dollar to boost exports, Walsh is expected to prioritize dollar strength.
• Walsh's approach is seen as a balance between potentially lowering interest rates and controlling inflation by tightening the balance sheet.

Speculation and Panic Selling in Precious Metals [05:30]

• The recent surge in gold and silver prices has attracted speculative buyers, including those seeking quick profits.
• When prices begin to fall, particularly after significant run-ups, less experienced investors may panic and sell, exacerbating the downturn.
• This panic selling is driven by fear and a lack of a well-defined investment strategy.

"And so when you start to see a little bit of a sell-off and you start to see the news that gold prices are falling really hard, people panic and they sell because they just get scared and that then makes that problem worse."

Long-Term Investment Strategy vs. Chasing Trends [06:33]

• The video emphasizes that building wealth is achieved through a proper, personalized portfolio strategy, not by chasing investments.
• Asset cycles are natural; assets rise and fall, and successful investors maintain their strategy through these fluctuations.
• Historically, during the 2008 recession, gold prices boomed due to quantitative easing and low interest rates, but fell when hyperinflation didn't materialize. Similarly, gold prices rose again in 2020 with renewed quantitative easing and inflation concerns.

The Importance of a Strategic Approach to Investing [10:38]

• Investors should not panic or change their strategy based on headlines; instead, they need to understand market dynamics and have a plan.
• Buying opportunities arise when investments are on sale, and savvy investors capitalize on these moments to add to their chosen strategy.
• Building wealth comes from executing a personal strategy, not from mimicking others or reacting emotionally to market news.

"The person that's chasing and panic selling is making the financially savvy investor rich because the financially savvy investor gets to now buy good investments at a discounted price."

Opportunity Amidst Market Volatility [12:40]

• The upcoming period, especially with Kevin Walsh at the Federal Reserve, is expected to bring more volatility and significant changes.
• While these changes can create emotional responses, they also present opportunities for financially savvy investors who understand the underlying market movements.
• The key is to be a smart investor who comprehends the situation, rather than someone who chases trends and sells in panic, thereby creating buying opportunities for others.