On May 7th, 2019, the Dow took a 600 point loss and dropped below 26,000 points, the hardest hit in 2019. The selloff was caused by the pressure President Donald Trump has put on China to up the current tariffs on Chinese goods. China is planning to meet with the President this week on U.S. soil to issue a countermeasure to the tariffs.
While both of these economic powers are flexing their muscles, the impact of the instability is being felt worldwide. Two days later, the Dow dropped again, this time 400 points. During this uncertainty, gold has gradually moved on an upward trend, again approaching the $1,300/oz breakthrough.
Many forecasters now are more confident than ever that gold in 2019 will punch through the $1,400/oz level by the fourth quarter. While the Stock Market has seen highs and now lows, the scenario is slowly resembling the bubble of 2008 in many ways. But the major differences and additional is the geopolitical conflicts that are on the horizon with the U.S. and China.
Much is at stake when China sits down with President Trump to negotiate the tariff situation. No longer will the communications be done via email, twitter, and the press, now it will be done face to face, mano y mano. Until an agreement is in place, the market will continue its current path of ebb flow and constant readjusting. The roller coaster of the Stock Market is a turbulent ride for any investor to partake in.
The safe haven now, as it was in 2008, is precious metals as a tangible asset and hedge against these turbulent times. One thing gold can say is that it has never been zero, no matter if it was in the Great Depression or the 2008 crisis, gold always has value. Protection ahead of these times is better than to be reactionary after the fact, time to prepare.