The Weekly Beacon – August 28, 2026

Share This Post Today!

Gold breaches a key point

Over the last week or two, gold prices have risen significantly to above $4,700 per ounce (as of lunchtime on Monday). This is a significant move as just over one month ago the price was around $4,000. On Monday, gold moved back above its 200-day moving average, marking a bullish technical signal. Gold has moved up as yields worldwide rise. Rising yields have led the U.S. Treasury to announce it will repurchase long-dated bonds to restrain long-term rates. This repurchase ramp-up by the U.S. Treasury has revived concerns about a weaker U.S. dollar, which has pushed investors into other assets like gold. Treasury Secretary Scott Bessent went on to state that the government could further expand its repurchase program and will announce a fiscal initiative to address elevated government borrowing costs.

Beyond fiscal policy, geopolitical uncertainty is providing gold another source of support as investors look for assets that are traditionally uncorrelated to other assets and that are strong store of value.

Furthermore, gold ETFs added more than 18 tonnes on Thursday, marking the single largest daily increase since last September and the 5th straight week of inflows. Individual and institutional investors continue to add gold as inflation remains a major issue and recent fiscal policy points to a weaker U.S. Dollar. The World Gold Council has also highlighted central-bank buying as an important source of demand while geopolitical and inflation risks remain elevated.

Gold has not been the only recent beneficiary; Bitcoin has also risen since the Treasury’s first announcement. The price of Bitcoin has increased by more than 20% over the last month after being in a bear market over the previous year. The move has also been helped by other crypto-specific developments. Amongst those developments were important regulatory discussions which will make it easier for crypto companies to raise capital. The White House also reiterated its stance that Bitcoin should be considered a commodity; the Bill (The Clarity Act) that would confirm this still needs to pass through the Senate. The Clarity Act, if passed, would establish a regulatory framework for digital currencies and allow for greater integration of Bitcoin and other large cryptocurrencies into the U.S. economy.

Regardless of who your fighter is, the debasement trade is back on as the U.S. Dollar has pulled back since the end of July. The debasement trade is a market view that the value of the U.S. dollar or other currencies will lose its value and continue to fall due to monetary, fiscal, and trade policy. During the debasement trade, investors rotated capital into real assets like gold and, more recently, Bitcoin. Real assets are seen as safe havens during periods when currencies lose value.

image created by Grok

For our long-time readers and investors, you know our preference in this trade is gold, but we continue to evaluate digital assets and consider the asset class in our investment process. We have invested in private assets across the digital spectrum over the years and have realized strong returns for our Alternative Asset Trust unit holders. We like gold over Bitcoin as the asset is tangible, has applications other than a store of value, and we believe it better hedges the economic and geopolitical uncertainty that we continue to see.

Disclaimer: MacNicol & Associates Asset Management holds share of stocks, mutual funds, and ETFs that invest in physical gold assets.

A legend takes a shot at his protege

Legendary investor Stanley Druckenmiller, who ran one of the most successful hedge funds for decades and now runs his own family office, wrote an opinion piece this week in The Wall Street Journal where he took a shot at the U.S. Treasury Secretary, Scott Bessent. Incidentally, Bessent formerly worked for Druckenmiller at George Soros’s fund in the 1990s.

Druckenmiller was critical of Bessent’s attempt to calm down bond markets and artificially push down U.S. interest rates. Last week, the U.S Treasury announced it would be doubling its bond buybacks at a time when U.S. 30-year interest rates are at a 19-year high. On Monday, CNBC reported that Bessent could further increase the Treasury’s bond buying program by conducting purchases with the Treasury’s $1 trillion general account, a government fund held at the Federal Reserve.

Druckenmiller stated that rates first moved lower on the first announcement, but a few hours later they moved higher as investors realized that this was pure price management.

Druckenmiller wrote that the government should let the U.S. bond market speak and avoid managing it.

Druckenmiller went on to say that governments that defend prices against market fundamentals always lose; it’s a matter of when they will concede and how much they will spend until then. He went on to say they should stop managing long-term interest rates and instead focus on cutting the deficit. The U.S. national debt level hit $40 trillion last week, and the annual deficit is expected to reach $2 trillion this year. Druckenmiller went on to say that liquidity tools can delay a serious fiscal problem, not solve one. Barclays chair of global research echoed similar thoughts, stating that the Treasury, Congress, and White House are making a serious effort to control the deficit and debt levels.

Every dollar used by the Treasury to buy back long-dated bonds is done using short-term debt. This move is essentially an exchange of long-term debt for short-term debt.

Bessent’s attempt to manage interest rates is ironic, as he worked alongside George Soros when he beat the Bank of England in 1992 as he forced the pound to crash out of the European exchange rate mechanism. That event showed how hard it is for a developed government to defend its currency when investors think it’s overvalued. Despite that experience, Bessent took part in an exercise last month with Japan to prop up the Yen (which has been in free fall) earlier this month. This was done so Japan did not sell U.S. Treasuries in order to buy their own currency. Japan is the largest foreign holder of U.S. Treasuries.

Bessent’s latest attempt to control long-term interest rates is bordering on desperate as the Trump administration seeks to improve economic conditions ahead of midterm elections.

When someone like Druckenmiller makes a public statement, you listen. If you do not think Bessent cares, you are mistaken. Last year Bessent stated, “in macro, there is Stan, and then there is everybody else”.

We, along with many financial market participants, presume FED Chairman Kevin Warsh shares similar thoughts to Druckenmiller on Bessent. Warsh worked for Druckenmiller after leaving the FED in 2011. Warsh has previously stated that monetary policy works best when the market focuses on signals from the real economy rather than guidance from the FED.

We share similar thoughts with critics of the Treasury, as they look like they are doubling down on a losing hand, especially with the report from CNBC on Monday. We think we are in the early innings of a serious fiscal problem that will need to be solved before it blows up in everyone’s face, which could be catastrophic for the global economy.

For now, we continue to avoid long-dated debt instruments as we believe higher rates will more than likely occur in the short to mid-term. We remain highly short duration across all our clients’ fixed income exposure as we believe we can better manage interest rate risk at that end in today’s market.

Trade war accelerates

Trade negotiations between Canada and the U.S broke down late last week.  According to reports from The Hill, Commerce Secretary Howard Lutnick’s last-minute demands broke negotiations down. If you remember last week, Trump and Carney stated that the two sides had an outline for a deal agreed upon on Tuesday. The last-minute demands revolved around steel and auto tariffs, which, according to Bloomberg, Lutnick moved the goalposts for at the last minute.

The trade deal on the table would have cut the top-line tariff rate on Canadian cars and light-duty trucks from 25% to 15% and the tariffs on aluminum and steel from 50% ‌to 25% (Yahoo and Reuters).

Over the weekend, the Trump administration imposed 50% tariffs on select products after Prime Minister Carney stopped negotiations, stating that Canada will not be walked over and the U.S. demands showed the Americans wanted to destroy select Canadian industries. Trump intensified the tariffs by announcing 50% tariffs on Canadian auto parts, vehicles, and steel that would come into place on New Year’s Day. He also went on to poke at Canadian leadership, including direct shots at Ontario Premier Doug Ford in their ongoing feud and stating that he wanted to rename Lake Ontario to Lake America.

Canada responded to these tariffs on Tuesday with retaliatory tariffs on $20 billion worth of American goods, including steel, dairy products, appliances, and farm equipment. These tariffs would go into place on September 8th.

These tariffs upend one of the world’s largest trading relationships and will likely have ripples beyond a trading relationship. Trump put out posts on social media early Tuesday before Canada retaliated, stating that the country is one of the hardest to negotiate with and the country is ripping off U.S. farmers and driving American companies out of business.

Canada’s tariffs mostly match U.S. tariffs on corresponding products and are a means of protecting domestic industries rather than raising government revenue, according to a government official. In order to support businesses and individuals affected by these tariffs, Canada announced a $7.5 billion support package.

We have two problems with the support package: it is not large enough to assist Canadians as the tariffs will have a greater impact on supply chains, affordability, and economic growth, and the package is just more debt at a time when debt levels are sky-high in Canada.

We hope the two sides resolve these trade issues and come to an agreement, as the two economies are completely integrated. It would take years, if not decades, to reintegrate the economies and solve potential tariff-driven bottlenecks. A prolonged trade dispute would have a negative impact on consumers as well as economic growth in both countries.

Speaking of inflation.

In the topics we touched on above, there is a central overarching theme, a weaker U.S. dollar. The debasement trade, tariffs, Druckenmiller criticizing his old mentee, it all aligns. We think all these topics relate to why yields at the long end of the curve are at 10–20-year highs. We also think inflation remains on the mind of investors. On Wednesday, the PCE inflation indicator was released. The data points to hotter than expected inflation. The reading was not extremely elevated for July, but it could put pressure on Kevin Warsh and the FED to outline a strategy in order to restore price stability.

July’s PCE report confirmed sticky but not accelerating inflation, leaving rate-hike odds largely unchanged. Markets now await the August CPI release on September 11^th for further direction ahead of the FOMC’s Sept. 15–16 meeting.

For those of you unfamiliar with the PCE, it is an alternative to the CPI and is reported by the U.S. Bureau of Economic Analysis and it stands for the Personal Consumption Expenditure Index. It has often been stated that the PCE Index is the FED’s preferred indicator to measure inflation.

For now, it seems inflation will push higher, long term interest rates will follow, and there will be mass rotation out of the U.S. dollar which could continue to deteriorate in value. We hope you are prepared, we know we are!

Bought the dip

According to financial disclosures, President Trump bought shares in SpaceX in June. Trump reportedly bought up to $50,000 in SpaceX on June 23rd. The purchase was a part of more than 1,000 trades made by the President in June.

This gives Trump a stake in a major government contractor run by one of his former advisors, Elon Musk. Although this trade raises some eyebrows, the value of the trade is not very consequential in terms of Trump’s net worth, and his fortune is managed by 3rd party institutions that seek to replicate numerous financial indices.

SpaceX IPO’d in June and was immediately included in some major global indices due to changes recently made to index providers.

This move marks another financial link between Trump and Musk at a time when the administration could affect the firm’s orders and revenues as a large government contractor. SpaceX is a military contractor and often seeks approval from federal agencies.

The disclosed trade also comes at a time when Trump directed his administration to ramp up the number of U.S. commercial space launches, in which SpaceX is a dominant player.

As we have said since its inception in public markets, we would not bet against SpaceX and, more importantly, Elon Musk. For decades, he has shown what he can do with transformative companies; today he is doing that on a scale with allies at high levels and with the support of the government. We have purely questioned the immediate valuation, which for now we have been right on as shares remain within a few percentage points of their offering price and well below the peak price reached in the days after its initial public offering.

What we are watching next week

After an up-and-down week in equity markets (as of Wednesday), we continue to keep our eyes on developed global market yields. Many countries are seeing multi-decade high interest rates at the long end of the curve as inflation remains an issue. Canadian bank earnings dominated domestic headlines, as the big five lenders reported mixed second quarter results amid concerns over credit quality and net interest margin compression.

Next week we will be watching numerous indicators including China’s official manufacturing and non-manufacturing PMI’s, the U.S. unemployment report, and the eurozone inflation print. We think all three data points will give investors guidance on the state of the economy and how to position themselves moving forward.

MacNicol & Associates Asset Management
August 28th, 2026