Gold Market Wire
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Gold Market Update
Afghan Policy Chaos Bludgeons European Stock Markets
August 19, 2021 - (Gold Market Wire) - Western policy chaos over Afghanistan has taken its toll on European equities this morning, with the French stock market down some 3% in early trading. The market is shedding long positions as investors move towards cash, mainly the US Dollar. The seemingly incoherent policy response to the Taliban takeover of Afghanistan coming from a chaotic and disorganized departure of western military deployments, which then had to reverse and return to the Kabul airport area in an attempt to provide a corridor for western citizens to depart the country has shaken confidence in all western governments. Noticeably, and critically, Russian and Chinese embassies have remained operational and diplomatic missions are fully engaged with the Taliban. This is a foreign policy disaster of the first order for both the United States and the EU.
It is significant that in the wake of this ongoing disaster, replete with reports of executions of Afghans who has worked/collaborated with western military forces and the hapless stranding of American citizens across Afghanistan (were they given no advance warning to leave?) that it is the US Dollar which has rallied in the wake of the chaos. Not only is this little surprise, but it should serve as a final warning to the perpetual US Dollar bears who believe the "Dollar is Finished". When chaos hits the international markets, the flow is INTO US Dollars - not OUT. The only other currency to maintain its previous exchange value has been the Swiss Franc. No surprise there.
And Gold is...unchanged. So confidence is getting battered everywhere but the Dollar and Gold are holding. We may be at the beginning of the next leg that sees the US Dollar and Gold rise together against all other currencies. That theory, which we have held for years, is starting to come into practice once again. Dollar bears beware. International chaos will not initially be the death knell of the US Dollar. Ultimately, it may well be - but first, there is likely going to be a huge surge.