Gold Is the Only Everything Hedge in Existence

On August 29, 2017, President Donald J. Trump released an official statement on North Korea:

The world has received North Korea's latest message loud and clear: this regime has signaled contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior. Threatening and destabilizing actions only increase the North Korean regime's isolation in the region and among all nations of the world. All options are on the table.

Just last week, Trump said, perhaps too hastily, that North Korea “is starting to respect us.” Whatever glimmer of hope may have been expressed through that statement, such hopes were dashed yesterday when North Korea fired another missile over Japan, despite Trump’s repeated warnings.

So where does this leave the US? What choices are left for Trump to consider? Should the US escalate confrontation to the point of armed conflict, or should the US continue its diplomatic stance, restricting its fight to policy and sanctions?

Even the latter path is perilous and may increase the odds of entering into a conventional war. China is North Korea’s closest ally and largest trading partner. And the key to reining in North Korea is to exert an even stronger influence over China. Such a prospect does not seem likely.

As a nation, we are more alone now than ever before. And we are moving into a period of heightened risk that may be with us for the long term.

Trump’s policies--which are both isolationist and hegemonic--have estranged the US from its allies, many of whom are influential in the UN. Amidst this backdrop of isolation, Trump also declared economic war on China. In stark contrast to the moment of optimism--remember “Make America Great Again”?--that brought Trump into office, and perhaps rightfully so, we now find ourselves, at least on the geopolitical stage, in a vulnerable position.

This is not all Trump’s fault considering that he inherited an already messy situation, both domestically and internationally.

In other words, trouble has been brewing for quite some time. And our most formidable opponent, China, has also been gearing up for this fight over the last few decades. It’s now all coming to a head.

Unfortunately, in the event of an economic war (which we’re in, by the way), the odds favor China (they hold a slight advantage). In the event of a conventional war against North Korea, or North Korea and China, mutual destruction is imminent. And in the eyes of most developed nations (many of which are our estranged allies), China is already perceived as the world’s largest economic superpower.

Domestically, Trump is a catalyst for change. Geopolitically, Trump is a dangerous accelerant.

On the domestic front, Trump has the opportunity to effect positive change. The majority of Americans voted him into office, and a large majority still supports him or is at least willing to give him a chance. On the geopolitical front, things are a bit different. Exerting global influence and power over the rest of the world is a difficult and dangerous endeavor. And right now the US is on its own; a state of global alienation that makes the US an easier target for its enemies.

Our current geopolitical situation carries with it a tsunami of risks, all of which can negatively affect the day-to-day lives of most Americans. The risk of economic turmoil is certain. The risk of military engagement is possible yet still avoidable. Fortunately, we can hedge the former. And there is only one asset that can do it: gold.

Gold is the only “everything hedge” that we have.

It may not have the capacity to perfectly hedge any “specific” risk, but it is the only asset that can hedge the broadest range of risks and calamities across the board.

What else can hedge stock market downturns, inflation, deflation, recessions, depressions, currency manipulations, government bail-ins, political uncertainty, and other risks that threaten your wealth and economic well-being? Cash won’t do it. Stocks certainly won’t do it. Real estate is too large and illiquid to be of help. And cryptocurrencies are too new, intangible, technology-dependent, and lacking in intrinsic value to be a real safe haven.

But gold...it’s the only time-tested asset that has always maintained its value as sound money.  And for that very reason, gold is the only thing that can hedge against any economic risk that may be considered “hedgeable.”

Right now, gold is $580 below its 2011 high of $1,900. A general barometer for the widest range of global risks, gold is now steadily rising, yet still at discount levels, This signals an opportunity to purchase safe haven assets, as the imminent geopolitical turmoil has yet to fully materialize.

To buy gold now is to take a proactive step toward insuring your wealth and protecting the economic well-being of those who depend on you; a wise and timely decision that can only bring about financial security and advantage.

We don’t know what the future will bring. We certainly don’t know how this showdown with North Korea and China will end. We cannot control what happens in the geopolitical sphere. And neither can President Trump, despite his huge efforts.

But what do have control over what we choose among our assets, how we protect our wealth, and how we hedge all of the uncertainties that are beyond our control. Sound money--gold--is a choice. And when it comes to hedging macro-risk, it is the only sound choice.