Trump tempest sees investors flee to golden safe haven

Professor Michael Tamvakis, Professor of Commodity Economics at Bayes Business School, said the flight to gold is the inevitable outcome of uncertainty over President Donald Trump's tariffs policy and other upheaval in the US.

He said: “A gold price of over $3,000/tr.oz. would have been unthinkable a year ago but it is not surprising in the current economic climate. Although we think of gold being used in jewellery and electronics, it is the investors' safe haven par excellence. And right now we seeing one of the most intense searches for a safe haven in modern history.

“As "Truncertainty" (if such a word could exist) abounds, investors have very few alternatives. The US stock market is tanking and the Cboe Vix Volatility Index has been rising since December. The last two months have seen numerous executive orders signed by Trump that on the one hand are dismantling (apologies, rationalising) federal services and the other hand announcing a flurry of tariffs against both historic friends and foes.

“If any of these measures were actually finalised, markets would adjust to them sooner or later. Instead they are invoked, then withdrawn and then reintroduced – exacerbating the volatility that ensures precious metals such as gold and silver will be sought after."

Taxing gold?

“The fear of possible US import tariffs on gold bullion have further increased demand for bars, which are busy leaving the London market, recast from 400 tr.oz. to 1kg bars in Switzerland and re-exported to the US, probably worsening the existing deficit in the US-Switzerland merchandise trade.

“Silver is also making substantial gains, but rather more quietly as it is only a fraction of the value of gold. The gold/silver cross rate which persists at over 80 for the last year. This usually indicates a weak world economy, increased uncertainty and fleeing to safe havens. Silver can still be a safe haven, especially for the less well off, for whom gold has become too expensive.”