Gold is going up because Trump is talking down the dollar, feeding ‘the narrative of relative U.S. decline,’ UBS fears

The price of gold hit another new record yesterday, soaring above $5,300. It’s up an astonishing 3% this morning, as measured by the Comex continuous contract. Gold has gained 22.31%, year to date.

It’s not hard to see why. Gold is outperforming as a safe haven for investors who are bailing out of assets being dragged down by the falling U.S. dollar. 

The dollar fell 1.3% yesterday against a standard index of foreign currencies. It’s down over 2% year to date. One euro now buys $1.20. The British pound is worth $1.38. The dollar hasn’t been this weak for years.

U.S. President Donald Trump said he was totally fine with that. “No, I think it’s great,” Trump said when asked by reporters yesterday. “I think the value of the dollar—look at the business we’re doing. The dollar’s doing great.”

The president is hoping that a sinking dollar will make U.S. assets cheaper and thus boost America’s export trade.

The risk is that the rest of the world loses faith in the dollar’s status as the world’s “reserve currency,” the notion that the dollar, and dollar-denominated assets, will always be the safe call. No one on Wall Street seriously thinks that the U.S. is in danger of losing res...