GOLD prices fell back five per cent on Thursday after peaking at a record $5,500 an ounce on Monday as speculators took their profits and cashed in. This follows the stratospheric rise of 100 per cent in the past year, with silver rocketing 285 per cent.
However spectacular, it is the crashing of the US dollar which is making the Wall Street stock market increasingly nervous of the deliberate devaluation of the currency by Trump’s attempts to reduce America’s trade deficit.
The US dollar is in free fall – but Trump claims it is a good thing.
‘I think it’s great,’ the US president said in Iowa on Thursday. ‘Look at the value of the dollar. Look at the business we are doing. The dollar is doing great.’
Since January 19, the greenback has plunged by 3.19 per cent against a basket of other currencies, and is now at a four-year low. On Tuesday alone, it fell again by almost 1 per cent.
Trump’s mission is to pump up the US stock market, hoping that lower interest rates and more export revenues will boost earnings.
‘I also predicted that the stock market is going to double in a relatively short period of time because of everything that’s happening,’ he boasted.
But Wall Street isn’t quite so sure that all is well. Tech shares suffered a 1.2 per cent sell off fall on Thursday with Microsoft leading the way.
However, the biggest worry within the US markets is that international investors are losing faith in Washington policy making under Trump, and losing any confidence it had in the US dollar.
This threatens to end the dollar’s status as the world’s reserve currency with a massive crash that ends all foreign demand for US government debt.
‘It is alarming,’ says Jonas Goltermann, the deputy chief markets economist at Capital Economics.
‘What is worrying is not the value of the drop, but the speed at which it has happened’, he added.
One trigger for the dollar’s fall was a fresh signal that the Trump administration wants a weak dollar which would make US exports cheaper for foreigners to buy and imports more expensive for Americans to buy.
International investors’ interest in buying and holding US government bonds is linked to the strength of the dollar, and the US government’s ability to cheaply finance its ever-expanding budget deficit with its $38 trillion national debt.
Trump’s plan is called the ‘Mar-a-Lago accord’, in which the Federal Reserve Bank intervenes to buy bonds and keep yields low if foreign investors sell US treasuries, according to Stephen Miran, Trump’s economic adviser and Bank governor.
Or, in other words, print trillions of dollars more, even at the price of a ‘great crash!’
Meanwhile, in London, bad loans of the so-called unregulated ‘shadow banks’ to the speculative, non-profitable AI Tech industry are threatening to speed up a financial system meltdown.
The $2tn (£1.5tn) private credit industry is being investigated by the Financial Conduct Authority (FCA) watchdog over its increasingly critical source of funding for the speculative AI boom. It has not been rigorously marking down the value of bad loans that are at risk of not being paid, creating a great crash!
Critics of the shadow banks have accused them of ‘mark-to-myth’ valuations that rarely take hits even as a loan is obviously turning bad.
Figures from private equity database Preqin suggest that about $50bn of data centre projects were funded by private markets between 2021 and May 2025.
Andrew Bailey, the Governor of the Bank of England, recently warned of an ‘urgent need’ to make the ‘shadow banking industry’ safer amid growing fears it could be the cause of the next financial crash.
The ‘Funds’ often themselves borrow money from traditional banks, exposing the wider system to a huge risk.
It’s clear that a ‘great crash’ is on the way.
Trumps ‘desperate plan’ to devalue the dollar will drive away foreign investors buying US government bonds, bankrupt the US government and crash Wall Street, along with the world’s financial system.
That’s what is behind the current rocketing gold price, and that’s what is driving the ruling classes of the US, UK and EU to war against Russia and China and against their own working classes, to make them pay for the crisis.
The only solution is to build sections of the International Committee of the 4th International in every country to organise and lead the world socialist revolution to bring in worldwide socialism!
