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Weekly Touchpoint: Historian: Trade War Beginning of New Cold War

Posted By Isaac Nuriani |

There’s renewed talk that the U.S. and China will find enough common ground in the near future to end what has become a very bitter trade war between the world’s two largest economies. However, some observers believe even if that happens hostility will continue to characterize relations between Washington and Beijing. One noted historian and senior fellow at Stanford University’s prestigious Hoover Institution says the ongoing trade war is the very beginning of a new Cold War, one that could have far-reaching implications for global stability. The possibility of “Cold War II” between China and the U.S. begins our look this week at important news for followers of precious metals.

  • In a recent conversation with CNBC, historian Niall Ferguson said the contentious trade war between the U.S. and China is not merely a trade war but something much bigger. It is, in his estimation, an “early stage” of a second Cold War. Ferguson believes this new Cold War will persist long after the trade relations component is resolved. “The problem for Trump is that, having started this Cold War with a trade war, he’s no longer in a position to simply turn it off when it suits him because the thing has escalated into other domains,” he explained. The prospect of a much bigger and broader conflict with China is something retirement savers eyeing gold should pay particular attention to. Even if the trade war is somehow resolved, protracted strife between two of the world’s biggest superpowers does not lend itself to calm financial markets.
  • A recent report by JP Morgan analysts John Bridges and Siddharth Mishra acknowledges that gold “may face short-term trading risk after its sharp move” since June – meaning the price could bounce around just a bit as everyone takes time to catch their collective breath. However, they say a longer-term view suggests “gold’s upward break has strong fundamentals.” Translation? The combination of a new global emphasis on loose monetary policy and what they anticipate will be a reduced supply of the metal leads Bridges and Mishra to conclude gold is at the beginning of a “decade-long bull market.” Yes, a decade. Check out Miningmx.com for more.
  • According to a growing chorus of observers, including Forbes senior contributor Rob Isbitts, the rapid trend worldwide toward negative yields means that gold looks superior to more traditional interest-bearing assets that have enjoyed safe haven status in the past. One of the standard knocks on gold is that, as a commodity, it has no capacity to pay a yield. But with zero-to-negative yields now on the way to becoming standard, Isbitts says those who have traditionally looked past gold’s appreciation potential in favor of finding some kind of yield during periods of distress could be more inclined “to allocate their ‘fear’ money to where there is some profit potential” this time around. And, in Isbitts’ opinion, that would be gold.
  • Once the debt-ceiling crisis was resolved in late July, the federal government wasted no time getting back to the business of spending money. In August, the Treasury added another half-trillion dollars to the national debt and is slated to add a total of nearly a full trillion by the end of the July to December 2019 period. That’s bad, says independent economic analyst Steve St. Angelo, but what’s potentially good about it is how all of that furious money printing could further strengthen the prices of gold and silver. As a matter of fact, says St. Angelo, when you compare the total value of mined gold and silver in the world with the rapidly growing amount of fiat currency being generated both inside and outside the U.S., “precious metals now look better than ever.” For more on St Angelo’s revealing comparison, read Augusta’s latest blog article here.

For some, it’s difficult to decide which sounds more bizarre: (1) that we could be at the outset of a new and potentially dangerous Cold War, or (2) that much of the world, including the U.S., is on the verge of a negative interest rate environment. Either way, the fact that there are credible voices projecting these developments speaks to just how precarious the global economic environment has become, as well as how important it is that your portfolio is ready for the potential fallout from either – or both. If you think it’s time to have a conversation about the role safe-haven assets can play in protecting your savings, we suggest you choose Augusta to help you easily and transparently understand your precious metals options. Call Augusta Precious Metals at 800-700-1008 or visit Augustapreciousmetals.com.

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