Why is Trump Crashing Gold? {Real Reason) | Akshat Shrivastava

Hey guys, what's up? So on this video, I'm going to speak about gold. Now take a look at this chart. You will clearly see that gold has fallen by roughly 30% from its peak. People who bought gold in 2025, end of the year, they might be struggling with the results or returns that gold has been generating, they might be getting a little bit worried. So is this a good time to downward average? I will discuss that more importantly I will cover the point that hey what is the back game that is happening here that is US doing something to gold right or Trump's policies are they hurting gold prices the answer there is a yes if you understand this macro game sensibly you will hold your positions on gold more strategically and in case you understand the complete game it will give you the foresight or insight to enter into gold trade right now so point number one is that people have been telling telling us especially gold bugs that you know what gold typically goes up in value as long as uncertain conditions exist right for example if a war is going on then gold prices will keep on rising but right now if you look around Iran US war is still going on Russia Ukraine war still going around so it's not as if that wars have ended but gold what's happening gold is down 30% so why is that happening okay so for this we need to go and look deeper into the fundamental reasons and let me explain this one by one okay guys just a very quick input I have started a global investing community. This is catered to serious investors. And in case you are someone who is looking to build a global diversified portfolio which includes gold, US equities, Indian equities, then definitely check out my commentary right and community links in the description comment box. I do regular classes. I give macro fundamental based commentary. You will really enjoy the experience. I also cover advanced investing strategies. So in case you are a serious investor, do check out the link. Now with that said let's move over to the main video. Now first and foremost point is that you need to understand the use case of gold. Now people just assume that gold is a bet against dollar right now that is called as dd dollararization trade. Okay. So for example if US dollar is going down in value then gold will typically go up in value. Now that's one of the use cases. Second use case is that gold is a store of wealth. Gold is not the only store of wealth. For example, real estate is also a store of wealth. US dollar if you compare it to other currencies is again a store of wealth. For example, in the last 2 three years, US dollar has strengthened compared to INR. So if you are comparing US dollar to INR and looking at that trade setup, then US dollar has been a store of wealth. But if you compare let's say gold to US dollar, then gold has been a better store of wealth compared to US dollar. So this is the second use case of gold. Third use case could be jewelry. Fourth use case could be an anti-inflation hedge. So there are multiple use cases of gold. Right? So from an investing point of view, there are three critical cases or three critical use cases of gold that I will present. If you study these, then it will give you a better foresight into investing in gold. Okay. So let's first and foremost understand the store of value argument and what exactly is Trump doing in order to present US dollar also as a viable store of value because gold and US dollar is in a head-on comparison or competition here. Okay. So okay so first and foremost take a look at this chart. This is a very useful chart and this shows the buying power of US dollar. Okay. So for example take a look at the year 1920. Okay. So the buying power of US dollar was fairly high. with one US dollar you could buy like a T Hershey's bar okay back in 1920 but right now you can only buy one okay so the buying power of US dollar has gone down dramatically this is spread across any use case right for example if you consider that by 1980 you could buy like in $1 you can buy 17 oranges but now you can only buy one orange okay so on and so forth so this is very clear that if you start looking at the buying power of US dollar it has been consistently coming down. Right? Now, if you compare this to gold, right? So, for example, 1 g of gold, let's say if it used to buy 30 Hershey's bar back in 1920, even now it buys 30 Hershey's bar, that same 1 g of gold. So, therefore, people believe that you know what that compared to a US dollar, gold is a better store of value. And this is 100% true. But this is one of the many use cases of gold. Now, what is the anti-rade here, right? So the anti-rade here would be that see US dollar also has multiple use cases which are stronger than gold. For example, if you're looking to buy something, okay, let's say you want to buy Apple stock. Now if you have $100, you can easily go and buy an Apple stock today, right? There is very less friction. Convenience is very high in terms of changing that US dollar into like one Apple share or whatever. Okay, but you can't do that with gold that easy because you have to sell gold. If you own physical gold then you have to bring that money deposit it in a bank account or whatever right and then finally buy like stocks with it. So there is friction involved. So every asset has a use case including gold. One of the primary positive use cases of gold is the store of value argument. And here also just on this dimension US dollar right now is competing well right. So for this let me show you this chart right? So so basically this is DXY or dollar index. So what this tells us is the strength right strength of the US dollar compared to other basket of currencies right now other basket of currencies. Now what you will notice is that from let's say 2022 up until now this DXY index has almost stayed flat. Okay, this is a very important point because what is it that we are trying to do? We are trying to study the feature of store of value or store of buying power of US dollar compared to gold. Now has gold won that race? Yes. Okay. It has done better because historically it does better. Okay. Now that's one of the use cases. People believe that this is the only use case. That's not the case. Okay. But if you look at US dollar, it's not as if that US dollar has gone down compared to other basket of currencies. So let me without confusing you, let me just write the summary point. Let's see if you are comparing USD versus gold. Gold is a better source of value but it comes with its own set of friction. For example, convertability against US dollar you can take leverage. For example, when you are buying one Apple stock that becomes an asset, you can take like 100% leverage against that. That might not be possible in many formats of gold. So on and so forth, right? So there are multiple use cases of USD versus gold, right? But from a store of value perspective, gold has one. But if you compare USD with other currencies, it's not as if that US dollar has lost. This is a very important point that people don't understand. And Trump's plan is to make US dollar win on this. Okay. Now, how exactly is Trump doing this? So, let me give a very quick commentary. And there are two things that Trump is doing. So the first key thing that Trump is doing is that he's offering higher interest rates or at least giving the impression that he's going to offer higher interest rates on US dollars. Now what is the meaning of this? See it's very simple. So let's imagine that this is the year 2026 and INR or Indian government is offering 6% in INR terms for storing money in INR rupees. Okay. Now US government comes and says that you know what okay we will offer you 5%. Now then you'll run your computation. You'll think that okay you know what every year INR depreciates by 3%. So US government giving me 5% interest rates and Indian government giving me 6% in INR terms interest rates. So US deposits are better for me. So you will take your money and deposit it in US dollar. Okay. By buying US treasuries. Now is Donald Trump doing this? Yes. So for example, if you study Kevin Walsh history, he's the recent Fed chair, right? Right? And he was recently appointed as the Fed chair. Right? And if you study entire history of Kevin Walsh, he has been making claims that boss, you know what what I'm going to do is that I'm going to make the US government's balance sheet more clean. I'll make it less. I will not expand the balance sheet of Fed. I will follow hawkish policy. Hawkish policy means what? That you know what? We'll keep the interest rates high. So with that point, right, the Fed is constantly giving signals that we are going to keep the interest rates high. we are not going to cut interest rates and by keeping that impression that the interest rates will remain high there is incentive for people to move to the US dollar so this is happening this is strategy number one strategy number two to preserve the store of wealth status of US dollar what Donald Trump is basically doing is that he's creating a lot of volatility now what is the meaning of this let's pick the case study of Iran US war now every week the status on Iran US war keeps on changing okay so he's saying one day I'm fighting then no I'm not fighting then third day he says I'm going to blow up your ship then fourth day something else happens and the cycle keeps on repeating repeating repeating and this has been happening since March okay and there's no clarity so keeping the world in limbo what does that do or keeping the world unclear what does that do well it hits the emerging market currencies for example India gets hit Sri Lanka gets hit bunch of other developing economies get hit exactly get it well because see if there is like more uncertainty in the world money will move to safer assets. For example, banks, central banks moved a lot of their money to gold. Then they start going to the second store of value. What is the second store of value? Well, then they start competing at a currency level that they will look at okay, which is the stronger currency which can handle turmoil. So then they start moving money to US dollar, euros, so on and so forth. So by creating volatility and by giving the impression that hey, I'm going to keep the interest rates high, Trump is improving the status of store of value for US dollar. Okay. So then comes the second use case of gold. Okay. So the second use case of gold is very simple that this is an anti-inflation hedge. Now what is the meaning of anti-inflation? Now very simple example, right? And let me show this to you on the chart. So here is the gold chart and you tell me what happened, right? When so when gold moved from $3,200 all the way till $5,500. What is the news that we started receiving? Well, this was the time when people started thinking that you know what boss is there even a point in saving in US dollars okay or in fiat currencies because this is just a bad trade right this is basically inflation inflation means what inflation means buying power of your fiat going down dramatically and at a fast pace okay buying power going down in relation to what in relation to gold or some other currency. Okay. So when gold prices spike so much right from 3200 all the way till 5,500 what is the impression that is created? Well the impression that is created is that hey there is going to be very high inflation in the world or there already is very high inflation in the world and you are better off saving your money in gold right or in some form of hard assets. So as a result gold started going up. So whenever gold prices reach so high in such short span of time, it gives the impression that US dollar is losing a lot of value. So creating a narrative and this is step two of Donald Trump's plan that he's trying to give the impression that inflation is very much in control right now. Okay, for example, here is a labor data, right? The expectation was that only few amount of jobs will be added to the US economy but record number of jobs have been added into the US economy. Donald Trump making out statements that you know what we will accelerate growth so much that inflation will kind of become deflation. Okay, he's now pushing the narrative that he cut oil prices. Why? Because we cannot cannot increase the oil prices too much. Why? Because that will lead to inflation. So the entire commentary right now starting July has been focused on this inflation the impression that you know what we will keep the inflation very low when inflation is very low that hits gold negatively. Okay, so this is the bottom line and this is one of the reasons why, right, gold has crushed a lot, right? So yes, so just to quickly summarize the second point, Donald Trump is running a very clear narrative of keeping inflation low. He's managing the headlines and going into the midterms, so midterms happen in November, it is very likely that he will likely keep the inflation numbers on the lower side. Now, how would he exactly keep the inflation low? Number one, by playing around with the oil prices. He's already doing this by not giving the impression that he's going to cut the interest rate too much. Well, Kevin Walsh is already at it. So, both the levers have been managed. Okay. So, then comes the third use case of gold, right? So, this has to do with sovereign hedges, right? So, one of the key use cases or key stories here is with Russia, right? So, for example, Russia was kicked out of the swift system when it picked up a war with Ukraine. So US government came and said that you know what we are going to sanction Russia and sanction means that they will not be able to use the dollar system of trading right for example if Russia is selling India its oil and India needs to pay Russia Russia cannot accept money in US dollar terms because we are blocking them off of the swift system. So as a result what happened was that in the year 2023 four five and even a partially in 2026 a bunch of central governments right so central banks be it across Turkey be it across China be it across Japan they started buying gold right and this was one of the reasons why gold prices escalated so much is this happening in 2026 not really the pace has slowed down more importantly I digged through the data and it's very important for us to understand what percentage of the forex reserves a central bank is keeping in gold. Right? This is a very important dynamics. We need to keep this in mind because if the governments or if the central banks are keeping a standard amount of gold into their forex reserve then it's not as if that gold is going to continue to run or there is no indication that they are undertaking something called as ddollarization that they are giving up on dollar and substituting it with gold. This is a narrative that a lot of like you know finance influencers have been speaking about but honestly looking at the data this is this doesn't seem to be true. So let me share this data with you right and this is a good inflection point to consider right so for example in 2021 and between 2026 US government used to keep almost 70 to 79% of its gold as reserves okay now again it is somewhere around that same number only right and the gold in the US has been marked at a lower rate basically like they have not revalued their gold so if they revalue it then this percentage will increase right but US is a special government because they own the fiat reserve status right and for them they can print almost infinite amount of US dollar what about other countries Germany for example 75 69 65 68 right Italy France almost similar Russia okay Russia we don't have clear data China again we will not have clear data India India nothing much happening right India is not increasing its gold reserves dramatically Japan used to be four 5% still four 5% Switzerland 6 7% again 6 7% so it's Not as if that these governments are deliberately abandoning US dollar and moving to gold. important question becomes why right and what has happened right that these countries are not doing it because it's a legitimate question to ask that you know what okay Russia was kicked out of the swift system so why is it that these countries are not you know sort of making efforts and moving more towards gold two problems right number one is Donald Trump that he started the tariff or trade war right in 2024 Feb and he made it very clear that see if you want to sell to the American public you have to accept US dollar Okay. So that's a stick approach that you know what that there is no way that we are going to let you sell to the American public unless you accept the dominance of US dollar which indirectly means that you have to keep US dollar in your reserves. Okay. Second key point is the growth trigger aspect. See basically US government or Donald Trump is making American equities so lucrative. So lucrative his own family money is being poured into American equities. So many people are investing in American equities. He's literally like coming out and pumping the market whatnot. So basically like he's saying that you know what boss if you do not keep money in US dollar how are you going to invest in these companies right? So he's creating both a carrot and a stick approach right where you will be punished for not storing your country's wealth in gold and plus if you want to make investments in the American market you have no other option but to buy US dollar. So by playing this entire game, he has increased the value of US dollar. This is by design. He's already doing it and it's reflecting in numbers. This was a little bit complicated video, but I hope you got the overarching framework. Now let me leave you with three or four central points in terms of investing in gold. Should you be buying? Should you not be buying? How exactly you should be buying? Point number one, if you're looking to buy gold at this juncture, please understand that gold is a wealth preservation asset. It is not a growth asset. What is the meaning? For example, if let's say that you have 10,000 rupees, okay, if you buy gold and leave it for the next 20 years, maybe you will see a 6 7% 8% kagger growth on it. But maybe if you buy it into five stocks like Microsoft, Meta, all this stuff there you might see a 10 15% 20% kagger. Okay. Now meta Microsofts are growth assets. Gold is a wealth preservation asset. So if you have let's say 100 units of portfolio, you want to leave 5 10% for wealth preservation. Gold is very good. Point number two, you should add gold. And the reason why I am adding gold up to 5 to 6% of my portfolio is that gold has very less correlation compared to other growth assets. For example, take a look at this data point. You'll clearly see very very clearly see that if you compare gold with real estate, the correlation is 50%, 30 to 50%. If you compare it with small cap, okay, or growth equities, the correlation is 10 to 15%. Okay, so for example, correlation means that hey, if gold goes up by 100 units, growth equities might go up by 20 units. And in an opposite circumstances, right, the opposite might play. Okay, for example, if growth assets are going up by 100%, then gold might only go up by 20%. So in a portfolio, you should always have negatively correlated assets or non-correlated assets. So gold serves purpose from that lens. Point number three, gold is an asset that you should buy on supports. Right? Now what this is a very important point and this is what I teach on my community also. So please check it out. Right? I have already explained what my community does. In case you're a serious investor, definitely check out global investing community. The feedback has been exceptional and you'll really enjoy the experience. So check it out in description comment box. So okay. So basically what is the meaning of buying gold on supports? So if you open up the day candle here, right? And if you check the support and let me open this up. What you will find out is that see gold has traded at different different supports. For example, this is 50-day moving average line. Okay? This is 150day. This is 200 day moving average line. Okay? Now, these are different different supports, right? For example, this was a major support, right? This was support one. This seems to be a very important support line two. Okay? Support line two. This where gold is currently trading as support line three. This is support line four. Okay. So if you are adding gold, you should at least add it across four to five different supports. Okay. What people typically do is that they chase gold. They will add all their gold here. Okay. And then they will not do any kind of downward averaging. This point is a very good point for downward averaging. This is around $4,000, right? This is very good provided that you leave some room to downward average in case gold prices falls at 3200. Now some of you would say that you know what maybe gold price will never fall only to 3200. Maybe I don't know right as I explained at the start of the video maybe gold will go sideways who knows okay or it might have a V-shaped kind of a rebound that it falls like this and then it goes up like this. Okay, we don't know what type of chart will get formed here no point guessing right. It really depends on to what extent Donald Trump is pushing his policies because his policies decide the future of gold. No doubt about that. US economy is very very powerful. The type of moves Donald Trump will make make will dictate a future of a lot of asset classes. So, it's very important to be diversified. I hope you enjoyed this video. It gave you clarity on when to add delete gold from your portfolio downward average. If you enjoy the video, do subscribe to the channel and I'll see you soon.