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The gold market has remained the topic of much speculation and excitement as prices have thus far maintained trade at or over the $1800 level for a few days. With the market now at a nine-year high, some are even asking about the potential for $5000 or even $10,000 gold prices.

Sharply higher gold prices from recent levels would seemingly suggest that an inflationary environment had taken over and that the inflation could be accompanied by significant political and economic unrest. If gold were to reach the $10,000 region, for example, it could be indicative of sharply higher prices for everyday goods and services. These substantially higher prices could keep the public from spending elsewhere, as their focus may simply be on survival. This could, therefore, result in a strong downward economic spiral that could take many years to recover from, if recovery is even possible.

If such a period of inflation, or stagflation, were to come to fruition in the U.S., it is highly unlikely that government personnel would put someone with the guts to put a stop to it in office. In other words, there likely will not be a second coming of Paul Volker, and the economy could be left to fight its own battles. Without strong assistance, however, that fight could continue for years or even decades.

As the U.S. fights the current and future economic slowdowns, it will almost certainly continue its path of holding interest rates at or close to zero while printing more money through QE. These actions will serve to weaken the dollar further and could keep the gold market on the offensive. This idea could be a major force behind gold’s recent upside and could keep the bulls out in force unless there is a major change to monetary policy.

In other news, U.S./Chinese relations are again a hot topic of discussion. On Tuesday, President Donald trump outlined a U.S. plan for further sanctions against China that include the removal of Hong Kong’s favorable trade status. China has, in turn, promised retaliation and could announce measures at any time now.

The strained relationship between the globe’s first and second-largest economies has been a major issue for global financial markets for some time. The ongoing spread of the Coronavirus and COVID-19 has put the nation’s differences in focus, as the U.S. has blamed China for the spread of the disease. COVID-19 also remains a very hot topic, as the number of infections is again on the rise. Several states, including Texas and Florida, recently made the difficult decision to once again close bars and restaurants. Some countries have also recently begun to reimplement lockdown protocols to try to contain the spread of the infection.

With the U.S. Presidential election quickly approaching, the fight to open or shutdown the economy could become an increasingly important topic. The Trump administration is currently pushing for schools to be open in the Fall, while some have suggested that many more closures are likely to be seen. The ongoing back and forth and unknowns surrounding the battle against the virus could keep investors flocking to the perceived safety of gold and could eventually weigh heavily on stocks and risk assets.