Worries about tariffs on importing gold and silver into the U.S. are creating a potential opportunity in the gold and silver markets.
As Midweek Memo host Mike Maharrey explains, the movement of metal into the U.S. incentivized by tariff fears is depleting London vaults and setting up a potential squeeze. This has ramifications for the price of gold and silver.
In this episode, Mike also points out some things investors should keep in mind as we move into the Trump era.
Mike opens the show reminding listeners that incentives matter.
"I think a lot of people forget about incentives when they are considering various policies. That’s because a lot of times, the incentivized behavior is unseen."
He expands his point by quoting French economist Frédéric Bastiat.
"In the sphere of economics an action, a habit, an institution or a law engenders not just one effect but a series of effects. Of these effects only the first is immediate; it is revealed simultaneously with its cause, it is seen. The others merely occur successively, they are not seen; we are lucky if we foresee them.
"The entire difference between a bad and a good Economist is apparent here. A bad one relies on the visible effect while the good one takes account both of the effect one can see and of those one must foresee."
Mike emphasizes Bastiat's point declaring, "There are a lot of bad economists out there."
"As we head into the second iteration of the Trump era, I hope people will keep the unseen in mind as they contemplate some of the new policies that will be on the table."
Mike notes that the markets seem optimistic about the economy under the Trump administration.
"I think it’s reasonable to expect some easing of regulations. We saw that impulse during Trump’s first term and we’ve already seen it in some of the executive orders meant to open up oil drilling for example. And we’ve seen some early signs of fiscal reform with a federal hiring freeze."
But he cautions that there are several worrisome factors outside of the president's control including monetary policy run by the Federal Reserve and the consequences of decades of monetary malfeasance.
"These are things you have to consider as an investor. You can’t just think, well, Trump is the president now. He’s going to be good for the economy. Let’s sell this gold. Let’s dump this silver. We don’t need an inflation hedge. It’s fine to be optimistic. But don’t be unrealistic."
Mike then pivots to one specific Trump policy -- tariffs.
He explains that the threat of tariffs is already making waves in the gold and silver markets.
"The United States imports a lot of gold and silver. All of the tariff talk has people wondering if the precious metals could be subject to those tariffs. To avoid that, people are starting to move gold and silver into the US. Think of it as a preemptive strike. Remember, incentives matter, right? This is creating an interesting dynamic in the London gold and silver markets."
Mike explains in detail exactly what's happening and how it creates the potential for a squeeze that could send prices significantly higher.
"The last time we saw this kind of market displacement was in the early days of the pandemic."
In a nutshell, there is a growing shortage of metal in London.
“This dynamic is having the effect of draining London vaults of gold and silver at an unusually fast rate –and at some point, these lower levels of vaulted metal in London could create price dislocations in that major market too. Those who have short positions in the New York market are in the process of getting squeezed, especially if they are having trouble getting their hands on physical metal to deliver into their short positions. Or get it into the right form.”
Mike explains why the squeeze would likely show up in the silver market first.
"Since mid-December, COMEX silver stocks have increased by more than 22 million ounces as London stocks have reached critically low levels. Adding to the problem, tepid mine output over the last four years has pressured above-ground silver stocks."
In fact, one analyst noted that London silver stocks are already at "a critically low cushion" and this creates a compelling setup for “explosive” price peaks to unlock inventories from unconventional sources.
Mike highlights an article by Money Metals Director Clint Seigner pointing out that it is currently a "buyers market" for gold and silver with premiums at low levels.
Mike emphasizes that now is a good time to take advantage of the buyer's market and possibly set yourself up to take advantage of the tariff squeeze. He ends with a call to action - call 800-800-1865 and talk with a Money Metals precious metals specialist today.
Articles Mentioned in the Show
It's a Buyer's Market for Bullion
Which Countries Produce the Most Silver
Unusual Situation in Gold & Silver Markets May Spark Big Price Moves

About the Author
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.