USAGOLD/Peter Grant/04-26-17
Gold has stabilized after falling in the wake of the French election outcome. Additional weight was supplied by the U.S. tax reform proposal, which includes a 15% corporate tax rate. Stocks love the idea, which put safe-haven assets on the defensive.
The White House is touting the tax plan as the “biggest tax cut and largest tax reform” in U.S. history. Whether President Trump can get such an ambitious plan through Congress remains to be seen. Republican deficit hawks are already raising questions.
If you subscribe to the formula that each basis point of tax cuts equates to $120 bln in lost tax revenue, we’re looking at a $2.4 trillion in revenue that will need to be found elsewhere. The Trump administration claims it will be offset by growth, the concern is that those moneys will have to be borrowed.
As a real estate developer — comfortable with leverage — the President may not be too worried about adding to our $20 trillion debt, but we as a country have already borrowed far too much prosperity from our future. Will he get the amplified growth he desires, or will corporations just use their new-found tax savings to finance the further consolidation of their industries?
The full U.S. Senate will troop to the White House later today to be briefed by Trump administration national security officials on the situation in North Korea. Focus is likely to be on the threat posed by the DPRK’s advancement in nuclear weapons and delivery vehicles.
Whether these concerns rise to the level of warranting a preemptive strike remains to be seen. Perhaps the President is looking to get a feel from the Senate as to whether they have the stomach for such a thing. One smart person suggested yesterday that if the U.S. evacuates military dependents from South Korea, things are really getting serious.
