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Donald Trump Is Costing Me Money


Trump's statement on defaulting on debt is dangerous.

As he gets closer to power, this fall, you can make money betting on it.

Your money is at risk as long as this crazy train rolls forward.

This site is not about politics. It's about business, and economics.

But sometimes, when politicians talk about business or economics, it has a direct impact on the business climate. It costs us money.

So it is with Donald Trump. His recent threat to default on the national debt, forcing those we owe money to take "haircuts," settling loans for less than face value, is costing me money. Even his attempt to walk that back by noting that "we print the money," while ignored in the short term by the bond market, remains a significant threat to your financial health. Right now.

Right now, the rate on 30-year U.S. bonds is 2.62%. While the rate has been generally falling since 2010 it remains subject to fairly wild swings. It started the year at 3%, but was 2.25% just last year. You can make money with bond options.

The reason you can buy money so cheap is because it is safe. It is backed by the full faith and credit of the government. That's in the Constitution. It's one of the things the convention's de-facto "majority leader," Alexander Hamilton, made certain got into the final document, something James Madison wrote about in Federalist #42.

George Washington personally wanted the clause there for the reasons Madison stated, because his own army was hampered, and his own interests were threatened, by the fact that states were controlling debt, issuing it willy-nilly and threatening to default on it. The language in the Articles of Confederation guaranteeing repayment was also weak.

We are talking, then, about an issue at the heart of the Republic. You don't threaten that. No one believes Trump's claims now, but as get closer to an election, as the media works to make the result seem uncertain, those threats are going to come back to bite. Remarks like this are great for the price of gold, good for any commodity that can stand in for currency as a store of value, and as uncertainty over the election has risen in the last 30 days gold has been on a tear. Get in front of that trade this fall and make money.

There's a rule in politics that Mr. Trump likes to ignore, that if you don't know what you're talking about the least you can do is to shut up. The more Trump is believed, the higher Trump rises, the more gold and other commodities will rise, the more interest rates will rise, and the more the dollar will fall.

As Donald Trump gets closer to supreme executive power, the more your investments are going to be threatened.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.