Gold in an Uncertain World

We don’t know about you but each new morning as we awake and look to the news it is preceded by an underlying thought of ‘what did Trump do last night’?  Love him or hate him, he has certainly thrown unprecedented ‘uncertainty’ into the mix of global affairs.  Gold, as the world’s safe haven is relishing this environment, up 7% this year (and silver up 10%).  Shares are unsure, the S&P500 up just 2.4% this year, having established an uncanny correlation with his favourability (according to Credit Suisse) as follows:

And let’s be clear, this is a global issue, not an American one.  As we touched on yesterday the EU have taken great umbrage at his currency manipulation accusations, threats of trade barriers and unwinding the Dodd Frank Act.  European Council President Donald Tusk wrote in a letter to European leaders that ‘worrying declarations by the new American administration all make our future highly unpredictable,’ and that there should be no surrender ‘to those who want to weaken or invalidate the transatlantic bond.’

China on the other hand has the same issues as the EU to deal with together with overt military threats over the South China Sea confrontation.  China, never a shrinking violet, has made numerous direct and firm responses seeing tensions between the superpowers at historic highs.

The biggest wild card by far is that of nuclear war.  If you watched 4 Corners last night you will understand why.  For a man so clearly impulsive and at times belligerently reckless to have unfettered, unilateral access to ‘that’ button has many rightly worried.  Unlikely, to be sure, but not the first time we’ve said that on the Trump journey.

There was a thought provoking article in the weekend titled “How much longer will peace hold out?” which explores the current environment in the context of it having been 60 years since the last major war.  It’s an interesting article with a number of links to further reading and you can read it by clicking HERE. 

The reality is a major war is most unlikely but these actions, posturing, and face saving add to an uncertain global environment of trade, finance, race, religion and politics.  Gold ownership has arguably rarely been more important.  As we say ‘Balance your wealth in an unbalanced world’….