(Kitco News) - The current economic and geopolitical climate, potential instability within the United States, and the possibility of some type of civil war are accelerating Willem Middelkoop's, founder and CIO of the Commodity Discovery Fund, concerns over the precarious state of the U.S.
"What's happening in the U.S. is a situation where you're near a civil war," he told Kitco News on the sidelines of PDAC in Toronto.
Middelkoop pointed to several factors contributing to his apprehension. He referenced billionaire investor Ray Dalio's warning of a "civil war" due to irreconcilable differences.
He echoed Elon Musk's sentiment about the U.S. being "broke" and the "need to cut the budgets." Middelkoop expressed worry that attempts to drastically cut government budgets could trigger unforeseen problems.
"[Musk] sent away 80% of the staff at Twitter. You can do that with a private company. If you do that with governments, there's a risk you destabilize the system. I'm getting a bit worried."
He further elaborated on the changing political landscape with the return of Donald Trump, noting, "You have a new administration. It's the second time Trump is president. It's totally different from the first time."
Middelkoop suggested that Trump's new team is "very well prepared, and they have a plan," drawing parallels to Gorbachev's glasnost in the USSR, which ultimately led to the system's downfall.
Economically, Middelkoop believes that "U.S. markets are very overvalued. It's a bubble in search of a needle", suggesting that current geopolitical and economic uncertainties could be the catalyst for a "huge correction."
Middelkoop situated the U.S.'s internal challenges within a broader global context, emphasizing an "80-year cycle" of change, with 2025 marking 80 years since the end of World War II. He argued that the world is moving from a "unipolar world centered around the dollar to a multipolar world."
Even figures like Marco Rubio acknowledge that the "U.S. [role] as the leader of this free world" is shifting. This transition, according to Middelkoop, is causing global adjustments and even friction between traditional allies like the U.S. and Europe.
Amidst this global instability and the move towards a multipolar world, Middelkoop highlighted the increasing importance of gold. He noted the "extraordinary" surge in gold prices, which have risen more than 40% over the past year, nearing $3,000 an ounce.
Furthermore, both Donald Trump and Elon Musk are calling for an audit of Fort Knox. Middelkoop pointed out that "central banks in over 25 countries are fleeing towards physical gold," with "record demand by central banks for three years in a row." He believes "gold is back as an essential part of the monetary system."
U.S. dollar's future
Regarding the U.S. dollar, Middelkoop stated, "The dollar will survive", drawing a parallel to the British pound after the decline of the British Empire. However, he acknowledged the growing strength of the BRICS alliance and their efforts to establish a separate financial system.
He noted Trump's administration's apparent preference for a "lower dollar" and speculated about potential "very creative" strategies involving a "Bitcoin reserve" to manage the economic challenges.
Middelkoop also mentioned the possibility of a U.S. recession, which the Trump administration could attribute to the previous Biden administration.
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