Mounting hostility between North Korea and President Trump has shaken the markets. This week, gold hit two month record highs, gaining $40 in just two days.
This gold uptick began earlier this week when the UN Security Council imposed new sanctions on North Korea, with the intention of hurting their economy, thus limiting the funding of their nuclear programs. This tactic has not worked in the past, and this time around the situation escalated. At this point, North Korea has directly threatened the U.S. territory of Guam with a nuclear strike.
Should this strike, or any similar act of war occur, President Trump has vowed to release
“fire and fury, like the world has never seen” on North Korea. This language calls to mind President Truman’s attitude in 1945, just after dropping the atomic bomb on Hiroshima.
Trump’s incendiary words had a predictable effect on economic affairs. The threat of war is always a blow to the U.S. dollar, and sure enough — investors are moving at breakneck speed to convert their paper dollars into safe haven metals.
The benefits of keeping a portion of your assets in metals can not be overstated. Your retirement funds and your savings should both be at least partially protected by a safe haven such as gold, which will have the effect of protecting your savings should the dollar take a hit. This reality is kept quiet from most investors because it doesn’t optimize the profits of Wall Street.
This escalation with North Korea is a classic example of how difficult it is to anticipate market volatility. We saw this week that the world can change overnight, and you should add gold to your portfolio ASAP to prepare for any outcome.