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New balance, but high risks

US President Donald Trump's actions are unsettling world trade patterns. The risks of lasting negative impulses are high. A hedge with gold and gold shares therefore appropriate

Economists speak of first-round effects and succession effects, i.e. second- and third-round effects, when political decisions are made. At the moment, the noise from Washington is so loud that market participants seem to be recognizing the first-round effects in particular. However, the current US policy is likely to cause some long-term economic disruption.

On the one hand, tax breaks and high government spending are boosting investment. But these incentives for the population are financed by borrowing. It can therefore be assumed that after about two years of good growth rates there could be a slump. Secondly, trade tariffs are to strengthen domestic manufacturers. But this is not possible in the short term. Firstly, stronger economic growth and the associated increase in consumption will stimulate imports. The tariffs therefore initially have a strong price-driving effect in the USA. And thirdly, there are second-round effects from a stronger US dollar. Interest rates in the USA are driven up by the stimuli. This increases the demand for US dollar investments. In the longer term, demand for foreign currencies could also decline if tariffs were to have a negative impact on imports.

However, the rising US dollar is undermining the competitiveness of products manufactured in the USA. The current development of the US economy and the currency markets is therefore likely to be only a transitional phase. Debt that is no longer manageable and inflation is rising sharply could create a great deal of uncertainty. Investors with farsightedness are therefore already positioning themselves in the long term. This includes gold investments in particular. The current strong dollar is holding back the gold price and thus ensuring moderate entry prices. As soon as the dollar weakens, the pent-up pressure on the gold price should ease and push up prices. This benefits not least the shares of companies with gold projects. These include TerraX Minerals and Treasury Metals.

Treasury Metals - https://www.commodity-tv.net/c/search_adv/?v=298478 - is making good progress with its Goliath Gold Project in Ontario. First an open pit mine will be built, then the gold mining will continue underground. It is estimated that 1.14 million ounces of gold and around two million ounces of silver will have to be extracted from the ground.

TerraX Minerals - https://www.commodity-tv.net/c/search_adv/?v=298245 - controls one of six major high-grade gold districts in Canada with its Yellowknife City gold project in the Northwest Territories. With the recent acquisition of two additional properties, the project now covers a huge 780 square kilometers of land.

Current company information and press releases from TerraX Minerals (https://www.resource-capital.ch/en/companies/terrax-minerals-inc.html) and Treasury Metals (https://www.resource-capital.ch/en/companies/treasury-metals-inc.html).

In accordance with §34 WpHG, I would like to point out that partners, authors and employees can hold shares in the companies mentioned in each case and therefore there is a possible conflict of interest. Only the English version of these messages applies.

Disclaimer: The information provided does not constitute any form of recommendation or advice. We expressly point out the risks involved in securities trading. No liability can be assumed for damages resulting from the use of this blog. I would like to point out that shares and in particular warrant investments are generally associated with risk. The total loss of the invested capital cannot be excluded. All information and sources are carefully researched. However, no guarantee is given for the correctness of all contents. I expressly reserve the right to make a mistake, in particular with regard to figures and exchange rates, despite the utmost care. The information contained herein has been obtained from sources believed to be reliable but does not claim to be accurate or complete. Due to court rulings the contents of linked external sites are also to answer for (so among other things district court Hamburg, in the judgement of 12.05.1998 - 312 O 85/98), as long as no explicit dissociation from these takes place. Despite careful control of the contents, I do not assume any liability for the contents of linked external sites. The respective operators are solely responsible for their content. The disclaimer of Swiss Resource Capital AG also applies: www.resource-capital.ch/en/disclaimer.html

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PDAC 2019

Always up to date with the newsletter from SRC

Swiss Resource Capital AG will use the information you provide in this form to keep in touch with you and to provide you with updates and marketing information. To receive our news, you still have to give us permission to send you E-Mails below.

You can change your mind at any time by clicking on the Unsubscribe link, which you can find in the footer of every email you receive from us, or by contacting us at info@resource-capital.ch. We will treat your information with care and respect. For more information about our privacy practices, visit our website. By clicking below, you agree that we may process your information in accordance with these Terms.

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