You Can’t Have Cake and Eat It Too

According to Wikipedia, “You can't have your cake and eat it (too) is a popular English idiomatic proverb or figure of speech. The proverb literally means "you cannot simultaneously retain your cake and eat it". Once the cake is eaten, it is gone. It can be used to say that one cannot have two incompatible things, or that one should not try to have more than is reasonable. The proverb's meaning is similar to the phrases "you can't have it both ways" and "you can't have the best of both worlds".”

You can’t have it both ways. President Trump is trying to accomplish an impossible task if he is under the assumption that we can have an equity market in the United States moving to new highs, when at the same time he is negotiating with China for a resolution on the trade imbalance and the fair transfer of technology.

These two issues simply put are incompatible in that you cannot have “The best of both worlds”. The fact of the matter is there is a price to pay if your endgame is to tangibly change the trade imbalance between China in the United States to a more mutually balanced agreement. It is even harder to come to some resolution that allows for a fair rather than the free transfer of technology from the United States to China.

Currently the data suggests that there has been a global economic slowdown which can be directly attributed to the current tariffs and efforts to end the trade imbalance between our two superpowers. This trade imbalance and the free acquisition of technology by the Chinese has been going on for quite some time. By no means was it created by the current administration. Whether you agree with how the current administration is negotiating with the Chinese or not, one has to acknowledge that this is the first administration willing to take on the battle.

That being said it seems likely that there will be continued and deepening financial fallout until the trade war comes to an equitable and fair resolution. It also seems likely that to solve the issues at the core of this trade war it will take some time.

If the above assumptions are in fact correct then we can expect continued pressure on the global equities markets, continued global quantitative easing by central banks and lastly the safe haven asset class gaining value. This would certainly be extremely bullish for gold and silver pricing and as such we could see both precious metals continue to gain value.

That is precisely what we are seeing today with gold futures basis the most active December contract currently trading at its highest value since 2013. As of 5:00 PM EDT gold is currently fixed at $1552.40, a net increase of almost 1% after factoring in today’s gain of $15.20 per troy ounce. While market sentiment might change from day-to-day the fundamental events which have recently moved gold prices upward will remain a major component in global markets until the events which have fueled this rally are resolved.

Wishing you as always, good trading,