Trade War Fears Send Ripples Across Markets, But Gold May Have a Silver Lining

LOS ANGELES, June 28, 2018 /PRNewswire/ --

FN Media Group Presents USA News Group News Commentary 

As language and actions ratchet up, the potential for a trade war seems to have sent ripples of fear through the markets. One of the areas that may hold harbor from the battle is gold, which is currently off its year high, but could rally based on fear alone.

The outcome from the fear of international trade wars is certain to weigh heavily on gold mining companies including Newmont Mining (NYSE: NEM), Corvus Gold (OTC: CORVF) (TSX: KOR), and Agnico Eagle Mines Ltd. (NYSE: AEM) (TSX: AEM).

Another of the domestic gold group, U.S. Gold Corp., has been moving to shore up its interests in the U.S., thereby evading any battle, and instead offering a solid domestic opportunity. U.S. Gold Corp. (NASDAQ:USAU), which is considered highly undervalued, is centered on production in Wyoming and at the same time exploring a well-known gold trend in Nevada where several majors play host to huge gold deposits.

Trading Words Sets the Stage for Fear

Since Donald Trump assumed the presidency in January 2017, a lot of his efforts have been focused on restructuring trade pacts with other countries that he sees as being unfavorable to the US. This has seen the president impose tariffs against many goods coming from some of our biggest trading partners such as Canada, China and the EU. In reciprocation, these markets have started taxing US exports, creating a ripe environment for a global trade war.

Trade wars are notorious as a catalyst for recessions and under those conditions, the commodity market is highly affected.

Gold, as a store of value, is shaping up as the perfect commodity for the times ahead. Since the beginning of 2018, the metal levelled out from a bullish trend sustained from late 2015 and then went into a downtrend after peaking in April. For experienced gold traders bearish market trends are not a cause for concern, but instead represent a boon in the medium and long term. The dynamics surrounding this trend are highly complex and many amateur investors lose out on some of the greatest opportunities because they do not understand them.