Gold Climbs as Trade War Is Back On!
When it comes to Donald Trump, expect the unexpected.
The enigmatic US President has shocked pundits once again with his anti-China talk. Putting Beijing on notice once again, with a fresh volley of tariff threats last week.
Once again, it has put the ongoing trade war into focus. A matter that had been sidelined by the ongoing corona crisis in recent months.
Not anymore though, Trump is back to what he does best: criticising China.
And while his supporters may love it, stock markets do not.
Gold bulls though are loving it…
Rising tensions sends gold ever higher
It’s been over two years since the US–China trade war kicked off officially. A story that dominated market attention throughout 2018 and 2019.
What was truly bizarre though, is that both gold and stocks marched higher. It seemed as though both bulls and bears were reaping the rewards.
A rather counterintuitive situation.
After all, typically these two assets share an inverse relationship. Meaning that if gold goes up, stocks usually go down, and vice versa.
That all changed at the start of 2020 though. Once the coronavirus hit its stride, stock markets tanked and gold soared.
However, over the course of April we’ve seen a slight reversal. Stocks have begun to mount a slow comeback as the outlook becomes clearer.
Still though, many economies are in a very fragile position. This virus has crippled trade and output, leaving many markets in tatters.
So, with Trump stoking the fires of the trade war once more, there could be more pain to come.
The tenuous recovery of the global economy may be in jeopardy once more.
All of which was music to the ears of gold bugs. The price of both spot and futures for gold was up overnight. Climbing to US$1,696.88 and $1,703.2, respectively.
A modest bounce in a rather forgettable week for the yellow metal.
Makings of a new bull run
The tale of the tape is, things are precarious right now.
Markets could go one or the other at the drop of a hat. And Trump is such a loose cannon that he could very well send things over the edge.
A rekindling of the trade war is the last thing many companies will want to see. And it makes holding onto stocks all that much harder to justify.
That’s why you need to seriously consider gold. Not just to preserve your wealth, but also to potentially grow it.
That’s why financial guru Jim Rickards has been pleading with people to consider gold. Putting his case forward in an extensive report dubbed ‘The New Case for Gold’. I highly recommend you grab your free copy, right here.
For The Daily Reckoning Australia