Gold Goes Up 40% Overnight?

The Latest Twist in the Gold Market…

Editor’s Note: Today, a thought experiment. I wrote this piece about 10 days ago, after the Trump administration announced a 39% tariff on imports from Switzerland to the US—including gold bars. However, within days, Trump had reversed course—as he so often does—and announced that gold would not be tariffed.

I decided to send you this article anyway—think of it as a “What If?” episode of Field Notes. It’s a perfect example of the potential impact of tariffs—gold repriced 39% overnight. This is exactly what would have happened had Trump gone ahead with the gold tariffs… and probably why the administration decided to back off.

But the whole debacle—the announcement, followed by the reversal—just shows the uncertainty that still lies ahead when it comes to the economic policies handed down from this White House. Indeed—that’s exactly why I’ve put together my Future of Wealth Summit this October in Ireland: to position you for the uncertainty that lies ahead—both to protect yourself and to profit. I’m putting together a complete “Wealth Action Plan” for attendees as we speak. (There’s still time to grab a ticket and save 40% off the admission price—but barely. Today is the LAST DAY to save 40% off the price. At midnight tonight—this offer comes down. Click here to learn more and secure your seat.)

Today, a cautionary tale: What would have happened if Trump kept the gold tariffs in place.

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Raise your hand it you remember Bob Ross, that painter guy on PBS who could turn a “happy accident” while he was painting into a willow or a waterfall or whatever?

Today, we’re all about a happy accident.

In the gold market.

This comes by way of Donald Trump and his agenda of imposing new consumer taxes on Americans in the form of tariffs that haven’t been this large since senators Smoot and Hawley exacerbated the Great Depression with their equally ill-advised tariff agenda.

See, Señor Trump has imposed a 39% tariff on Switzerland.

Sure, that’s gonna make your turkey and Swiss cheese pricier, assuming you’re buying authentic Swiss and not some Americanized version of it. And it’s going to make telling time with a Swiss-made watch pricier too.

But the big hit… well, that’s gonna happen in the gold market.

And it means gold prices in America are going to surge.

That’s not a guess.

It’s the impact of tariff math on gold prices.

Trump’s attack on Switzerland means that gold imported into the US is subject to the 39% tariff. So an ounce of gold at $3,400 as I write this would suddenly cost $4,726 in the US as the tariff kicks in.

And you might logically be thinking: Well, El Jefe, you goombah—don’t buy Swiss gold. Buy American gold!

That’s a dandy plan. American miners pull between 170 and 200 metric tons of gold out of American soil every year. For you who think in ounces, that’s close to 7 million at the high end.

So clearly American companies produce oodles of gold.

However…

The land of Edelweiss and Maria von Trapp refines 90% of the world’s raw gold that miners pull from the ground.

Basically, Switzerland is to the gold market what DFW Airport is to travel: the hub everyone’s gotta go through at some point.

In fact, a golden menage-a-trois exists between London and New York, with Switzerland in the middle. London and New York send boatloads of gold to Switzerland to melt down and refashion into new gold bars for each country. That happens because the gold bars that New York wants, and the bars that London wants are different in size and weight. So they have to be refashioned to meet each other’s needs.

Thing is, the tariff applies to kilo-bars and 100-oz bars, which tend to be institutional gold. Smaller gold weights—like, one-ounce bars or grams or gold coins—aren’t impacted directly.

And I emphasize “directly” because as tariffs push the price of large, institutional gold bars higher, institutions could very well opt to buy lots of one-, two-, five-, and 10-ounce gold bars. Though they all carry markups because smaller weights are more expensive to fashion, the markups are not 39%.

At the one-ounce level, where the markups tend to exist, prices are generally 5% to 7% higher than the spot price of gold. So it makes a lot of sense for institutional buyers in the US to start gobbling up all the less-than-kilo gold bars and coins they can find.

Which means potentially a shortage of gold—and higher markups—in America for Main Street consumers wanting to add physical gold to their portfolio.

And there’s the risk that Trump, who changes his mind when the wind shifts direction, could very well impose the tariffs on all the smaller weights as well, which would then drive America’s gold price up toward $5,000 per ounce.

Note: I started predicting a $5k price some time back, but I certainly wasn’t expecting it would come from tariffs imposed on Switzerland.

Which, in a roundabout way, brings me to a much bigger point for todays’ dispatch: Black swans—the events no one knew to anticipate, and which arrive with a shocking impact.

I talk a lot about gray swans, the rare events that are foreseeable but unlikely. Those buggers are everywhere these days. But black swans… no one knows where to look for them because, well, they are truly unknowable.

Best you can do is prepare for the future, with the full expectation that a black swan is going to come out of nowhere to disrupt the status quo in ways that are potentially devastating.

Swiss tariffs are a great example: No one owned gold because such tariffs were likely. We owned gold because of all the other problems we can see or which we can expect.

But because we prepped for the gray swans, we benefit when a black swan falls from the sky as well.

Sadly—frustratingly—that’s what the remainder of this decade is going to be all about.

There are a scary number of gray swans I can imagine. I write about them all the time: America’s unfolding debt crisis, the potential for a social or political crisis, the possibility that the US dollar hits historic lows and sparks severe inflation.

Or the possibility that the dollar loses reserve currency status, which would have Great Depression-like impacts on American families.

Those are all foreseeable.

I’m not saying they’re guaranteed to play out. But they are knowable, predictable events that we have to prepare for. And by prepping for them, we’re also prepping for the crazy, shocking, unknowable black swans that could arrive as well.

That’s our future, so to say.

It’s why I’m hosting my Future of Wealth Summit in Ireland in October.

The only way to prepare for black swans you cannot see is to prepare for the gray swans you can see.

Join me in Dublin if you want to keep those black swans from destroying your lifestyle… and get my complete “Wealth Action Plan”—all the assets to own to protect yourself and even potentially profit.