Don’t Overcomplicate: In Times of Strife, “It’s Time to Buy Gold”

MarketWatch  ( Original )
APR 6, 2018

Do you think international tensions are going to escalate or ease from here? Do you think the Trump administration is going to continue to be marked by erraticism and chaos or do you think it’s going to be calm, smooth sailing from here on out?

There are 1,000 points of argument and contention that can be made when it comes to investing in gold. But the one upon which there is near-universal agreement is that the greater the perceived risk of uncertainty and conflict, the better gold performs.

It seems the understatement of 2018 is to say that the biggest threat to the securities markets is a potential trade war.

A CNBC survey of financial executives at companies collectively valued at more than $4.5 trillion are worried; about two-thirds of the Global CFO Council expect a negative impact on their company.

And that was before this week, when China announced possible tariffs on more than 100 U.S. products that could affect $50 billion worth of outbound trade. President Trump announced late Thursday that he was considering penalties on an additional $100 billion in Chinese goods. And Chinese Commerce Ministry spokesman Gao Feng, in response, said Friday that China “is fully prepared to hit back forcefully and without hesitation.”

Even media outlets normally friendly to the White House, such as Fox News, aren’t buying administration claims that trade wars are easy to win and that there is a “pot of gold” waiting for the U.S. economy on the other side.

There’s good reason for this trepidation, too. History is rife with examples of protectionist trade policies that backfired.

Add it all up, and it’s possible the U.S. economy could slow amid the strife.

It’s reductive but true: Gold is a safe haven in times of trouble. Immediately after news of China’s retaliatory tariffs broke Wednesday, the precious metal spiked dramatically.

ORIGINAL SOURCE: It’s time to buy gold, sell U.S. chip companies as U.S.-China trade dispute intensifies by Jeff Reeves at MarketWatch on 4/6/18