Will things ever be the same again?
If the question seems as well a worn a cliché as any you’ll ever get, consider the two possible outcomes of the US election, which is now only a matter of a week or two away.
First, Hillary Clinton wins.
Good for the prevailing order, for the military-industrial complex of the USA, for certain international allies like Saudi Arabia and India, and for existing institutions like the IMF, the World Bank and the United Nations, however ineffective you might think them to be.
Under that scenario, the Fed will probably put rates up in December and gradually try to revert the US and by extension the world economy towards some sort of semblance of economic orthodoxy and stability.
And about time, you may say.
Except that, for all that he’s now behind in the polls, Donald Trump has raised issues in this US election that are unlikely to go away.
The first is that if the prevailing order is so good, how come trust in politicians is at an all-time low, the tools of conventional economic intervention appear to be increasingly ineffectual, bankers are hated and, to be overly dramatic in the style of Trump himself, the social fabric of the entire Western world appears to be under threat?
Even if Hillary wins, these questions will remain pertinent and relevant. Because, if the answers to them are not to be found in a Trump election victory at the polls, those who are raising them most urgently will surely seek solutions elsewhere.
How? Fascism, political fragmentation, economic isolationism, ultra-exclusive libertarianism – in many ways it doesn’t even matter how. The important point is that the uncertainty will be there, and that will feed off itself.
In this context, even allowing for a Clinton victory, volatility looks certain to increase. Indeed, it’s hard now to see a US-dominated world in which volatility is going to decrease.
The market consequences are hard to predict, but one or two things are clear. In the short term, traders will increasingly go in and out of volatility-based ETFs, like the VIX offered by Barclays and others. On a longer-term trend, gold is likely to recover from recent losses and go higher, notwithstanding both a stronger US dollar and rising US interest rates.
Because it doesn’t matter how strong the dollar is and how high rates go if you think someone is going to come along and burn your home - and there is a strong enough element in the US which is already thinking like this, whoever wins.
What’s more, in the event of a Clinton victory tensions with China and Russia are likely to rise in a way that somehow seems less likely in the event of a Trump victory - however strange it may seem to imply that a Trump presidency could lead to a safer world.
But the reason is straightforward enough. Both in the manner of his campaign and in the opinions he has openly expressed, Trump has made it clear that he has no serious truck with the old liberal pillars of truth and democracy.
He may express doubts about the outcome of his country’s own electoral process come November 9th, but that very expression shows a disinclination to hold democracy up as some sort of holy grail, after the fashion of his Republican predecessors Reagan, George HW Bush, and George W Bush.
It was in the name of liberation and democracy that George W sent the troops into Iraq - and look what happened after that. The world at large, including a sizeable portion of the US electorate, is now of the view that a lower regard for democracy might not be a bad thing at all.
Serious talking heads could be brought on to televisions and computer screens to remind willing hearers that after Independence in 1776 the next true experiment in modern democracy, that of the French Revolution, ended in something called “The Terror.”
This is the type of line that would be music to the ears of the Chinese government, and to President Putin, and is likely to be heard across right wing news networks in the US increasingly over the coming years, whoever wins this time round.
So, all in all, this recent dip in gold may be a real opportunity for those with an eye on the longer term. That old stager Algy Cluff, a man who’s built several gold mines in his time, always used to say that you don’t want the gold price to go too high because that would signify worldwide conflagration.
Nevertheless, if that is indeed what happens, it would probably be better to be holding gold than not.