Trump Just Crashed Gold Silver Bitcoin What You Need To know

Gold prices have crashed, silver had its worst day since 1980s, and bitcoin seems like it's sliding to zero. People are freaking out because they don't understand what exactly is happening. Just recently, we were talking that gold prices are about to cross 10 thousand dollars, but here we are, gold prices crashed from 5 and a half thousand dollars to less than 5 thousand dollars. Just a few weeks ago, people were freaking out about the shortage of silver that China has put restrictions on silver and all investors were massively buying silver as if there is no tomorrow, but silver prices completely collapsed. The real question right now is that will gold, silver, and bitcoin prices will continue falling or this is an opportunity and you should be buying these assets. Why the stock market is not crushing alongside gold and bitcoin and silver. Let's understand what exactly is happening here. The value of gold, silver, and bitcoin is directly related to the value of the dollar. The more valuable dollar becomes, the less valuable these assets will be and vice versa. Unlike bitcoin and gold, silver has a lot of utilities because it's used in a lot of electronics, but overall there is plenty of silver in the world. And most of that silver is recycled anyways, which is why it's not as valuable as gold. But on the other side, nobody wants to hold gold because gold is a very useless asset, you can't actually do much with it, but investors prefer it in order to hedge their wealth. Nobody wants to hold US dollars when its value is being evaporated, which is why in order to hedge against inflation, investors often move to safe haven assets such as gold, silver, and in some cases right now is even bitcoin. Investors predict the value of the dollar based on the action of the federal reserve. If the federal reserve suddenly decides to devalue the dollar, then investors are going to move into these assets and vice versa. So if you look historically at the price of gold, you will realize that for a very long time, gold prices have been extremely stable, especially after the 1990s up until early 2000s. Gold prices only fluctuated between 200 dollars to 400 dollars. The first biggest increase in the price of gold started back in 2008 when the federal reserve introduced quantitative easing and gold prices spiked from 762 dollars to almost 2000 dollars. Since the creation of the federal reserve, the main tool of the fed was interest rates, so if the fed wanted to limit the supply of money, the federal reserve would increase interest rates and vice versa. If it wanted to increase demand in the economy, it would lower down interest rates and borrowing money is going to become a lot cheaper and people are going to borrow more money, spend more money and that economic cycle is going to turn even faster. However, after the 2008 financial crisis, the federal reserve realized that they lowered interest rates to 0 percent and it did not have any impact on the economy, so the government decided that we have to take it to a completely different level. If lowering interest rates is not helping to boost the economy, we are literally just going to drop money into the economy, and that's what we call quantitative easing, where the federal reserve is buying US treasuries in the market at massive scale, and I am talking here trillions of dollars. So when you are throwing trillions of dollars into the economy, what do you think is happening to the value of the currency? It deteriorates, which is why gold prices spike to 1900 dollars. In fact, there is a direct correlation between the balance sheet of the fed and the prices of gold. Up until 2008, the total amount of assets that the federal reserve had was about 870 billion dollars, and that means that throughout the entire existence of the fed, that's how much of the US treasuries the federal reserve has purchased, because there was no mechanism where the fed could actually buy so much US treasuries, which means that so much money could theoretically, it was not even possible for that much money to get into the economy. But with the introduction of quantitative easing, in a matter of a few months, they threw into the economy about 1.5 trillion dollars, and the balance sheet has increased from 870 billion dollars to as much as 2.1 trillion dollars. And as the federal reserve kept throwing more money into the economy by buying these treasuries and increased its balance sheet to 2.8 trillion dollars, gold prices continued rising. So if you want to predict the price of gold or silver or any assets that are being used in order to hedge against the dollar, all you have to do is to take a look at what's happening to supply of the dollar on the other side. Between 2012 and 2018, the federal reserve has increased its balance sheet by about 2 trillion dollars from 2.8 trillion dollars, but gold prices kept falling down from 2012 up until 2020. It doesn't actually make sense. So the fed increased the supply of dollars by 2 trillion dollars. On the other side, gold prices have went down. How is that even possible? And that's because after the 2008 financial crisis, the United States did not experience any inflation or whatsoever. The targeted inflation by the federal reserve is 2 percent. But you can see clearly that after 2008, there has been multiple years where the United States had inflation that was below 2 percent. In fact, at a certain point, it was like 0.1 percent. So investors were looking at the US economy that the Fed is throwing trillions of dollars into the economy. The US economy is actually growing and has recovered from the 2008 financial crisis and that much dollars is not causing any inflation or whatsoever. Maybe because there is a shortage of dollars into the economy. Maybe there is a shortage of dollars across the globe. So it makes sense for the Fed to throw so much dollars into the economy, which is why investors abandoned gold and instantly moved to buy US treasuries. Especially if the US treasuries are paying you a higher yield than the inflation rate, then you are getting a far better deal than gold. Because your golds are shining out there and are not earning anything. But if you are holding US treasuries, you are getting consistent interest from the US government. In 2020, the exact same thing happened. The Federal Reserve again pushed quantitative easing and increased the supply of money from 4 trillion dollars up to 9 trillion dollars. But here is the reality is that it didn't actually lead gold prices to catastrophically rise. Why throwing 5 trillion dollars into the economy did not actually cause so much inflation. And that's because if you go back to 2020, the Chinese economy that was seen as the only alternative to the United States was actually closed down and nobody knew what is going to happen to China. Nobody cares about the European economies because they have been stagnating since 2008. So the only option in the world was the United States. So replacing the US dollar as the global reserve currency back in 2020 and 2021 was impossible even to imagine because the United States was at the top of the world. economy and the US economy was growing faster than ever. The moment the United States began to experience inflation back in 2022, what do you think the Federal Reserve instantly did? It increased interest rates to 5.5 percent and massively started quantitative tightening. It reduced its balance sheet from 9 trillion dollars to as much as 6.5 trillion dollars. Quantitative tightening is the opposite of quantitative easing, is when the Federal Reserve instead of throwing money into the economy, it takes that money that it threw through quantitative easing and takes it out of the economy by selling its US treasuries, or not directly selling the US treasuries, but allowing the US treasuries to expire without refinancing. Since the US government is never going to pay off its debts, but it's rising so much money, when those treasuries, especially short-term treasuries expire, the Federal Reserve is to refinance them, so it would offer another loan to the US government by buying the new treasuries that the government is going to release, but in this case, during quantitative tightening, the Federal Reserve is telling the government, look, I'm not going to buy more of your US treasuries, so you have to sell them to the general public. That restored faith in the US economy and the US dollar, which is why gold prices never actually spike significantly after that. The only real spike came in 2024 when the world realized that Donald Trump is about to become the president of the United States. Now, I don't have anything against Donald Trump, but if you actually think about it from the perspective of investors, they actually have a lot of concerns. First of all, they trust the US dollar because they trust the independence of the Fed, and Donald Trump has multiple times already attacked the Federal Reserve. He accused them that they are actually lowering interest rates only to help the Democrats. So investors are expecting that if Donald Trump is going to become the president, he is going to pressure the Federal Reserve to lower interest rates even when there is inflation. And the United States ended 2024 with inflation of 3%, and now if you are going to lower interest rates in 2025, you are going to cause even more inflation. When investors are investing anything, they are doing that not because of something that is happening today but rather because of what they expect is going to happen sometime in the future. So, suppose you imagine that the price of this asset or this stock is going to rise. Are you going to buy that stock today or you are going to wait when that price have already increased? Of course, you are going to buy it today because you are expecting it to rise so that when it rises, you are going to profit out of it. So when investors expect that the value of the dollar is going to deteriorate, they are going to take action today. So it leads to a self-fulfilling prophecy, whatever investors expect is going to happen anyways because what they expect is going to lead their actions now. So this massive increase in gold prices throughout the entire 2025 was primarily because Donald Trump has been reshaping the entire US economy. Remember the liberation day when he announced tariffs pretty much on every single nation of the world. What do you think investors were sitting down there and thinking, well, yes, the United States was the global reserve currency all this time, but it doesn't mean that is going to continue happening because all that was possible because of the free trade agreements that the United States had with most of the world's largest economies. And if we cancel the previous world order, there is no guarantee that in the new world order, the US dollar will continue being the global reserve currency, especially unlike 2020 when the only alternative, which was China, was completely isolated from the rest of the world. But in 2025, China seemed like the most rational actor that didn't actually instantly respond to Donald Trump, but rather it was actually planning to sign trade agreements with the European Union. And guess what has been happening in the last couple of weeks, Canada signed a trillion-dollar deal with China, the United Kingdom, many other European nations. All of that is pushing away investors from the US dollar, which is why they are selling massively their dollars and buying gold, which is leading to much higher gold prices. But Donald Trump did something that nobody actually expected. He appointed Kevin Walsh as the next chair of the Fed. Kevin Walsh has said multiple times that he wants to see lower interest rates, but there is something else that he said, that he is completely against the Federal Reserve expanding its balance sheet. At first glance, it doesn't seem like a big deal, but remember, in 2008, the Federal Reserve introduced quantitative easing because interest rates did not have much impact on the economy. So when investors realized that the next person who is going to lead the Federal Reserve is going to start massive quantitative tightening, which is opposite of what the Fed is doing right now. Now, in December of last year, the chairman of the Fed announced that it is over, no more quantitative tightening, and we will start quantitative easing, which means that buying or throwing extra $40 billion into the economy every single month. Now, the new chair of the Fed is like, we don't like that. We don't want any more quantitative easing. We want quantitative tightening. And this $6.5 trillion that's in the economy, we have to get it away by selling massively the US treasuries. That means that you're reducing the supply of dollars in the market, which strengthens the value of the dollars. So when investors saw that, they're like, it's time to buy the US dollars because it's massively going to bring down inflation. Nothing creates more inflation than quantitative easing, and if you get rid of the quantitative easing, you are going to make the dollar much stronger. And if the dollar is going to become much stronger by the middle of the year, it is much better to sell your gold or silver or Bitcoin and buy gold because in six months from now, the dollar is going to be much stronger than these currencies, which is why there is a massive sell-off of the gold, silver, and Bitcoin. Is that going to happen? We'll have to wait and see. But since Kevin Ward has the reputation or has been saying that he's against expanding the balance sheet of the Fed, investors are trusting him, which is why they're massively selling gold, silver, and Bitcoin.