Could a Trade War Send Gold Higher?

Markets have a lot on their plate right now, including the notion of higher interest rates, overstretched valuations and accelerating inflation. If that is not enough for stock market bulls to contend with, how about adding the potential for a global trade war.

Stocks are set to open lower again on Monday, as the threat of a trade war begins to sink into investor psyche. Last week, President Donald Trump made waves as he discussed heavy tariffs on steel and aluminum products. The 25 percent tariff on steel imports and the 10 percent tariff on aluminum could potentially give other nations-especially those that export such products-reason to retaliate with tariffs of their own.

The new costs are seemingly being used to negotiate a new NAFTA agreement, although both Mexico and Canada have said that they would possibly retaliate if such measures are taken.

The potential for more protectionist policies in the U.S. and an outright trade war could be considered bullish for gold and other perceived safe havens. Stocks could potentially take a much larger hit if proposals are followed through on. Companies that rely on these metals, such as heavy machinery manufacturers and makers of building products, could get hit hard. This could, in turn, drag the entire stock market down.

Secondly, a global trade war could fuel risk aversion, while also making the Fed more likely to stay steady on rates rather than hiking. A trade war could weigh significantly on growth, and the central bank would likely be very reluctant to risk sending the economy into recession by being too aggressive with rates. The unknowns about how a global trade war would affect companies and economies could put a serious dent into risk appetite, and could fuel buying in hard assets like physical gold.

The potential effects of a trade war can also spread-heightening tensions and making nations less likely to be willing to work with one another on other major issues.

While a trade war could potentially be bullish-in fact very bullish-for gold, it also goes to show that in times of economic or geopolitical duress, investors may still turn to this time-tested asset class.

If you don’t already have gold as a significant part of your portfolio, now is the time to consider getting started.

Adding physical gold to your portfolio has never been easier than it is today, and it may potentially provide not only significant price appreciation but also a meaningful hedge against the effects of a global trade war and other geopolitical and economic issues.

Speak with an Advantage Gold account executive today about these and the other possible benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold this key asset class using your IRA account.

Don’t wait for the next stock market plunge or for the dollar to weaken further before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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