As the US markets opened in a dramatic downturn, US stocks tanked. Growing fears of a looming transatlantic trade war sparked this steep drop. A subsequent wave of selling has swept through European markets. It’d be lovely to blame the sell-off on President Donald Trump’s sudden interest in purchasing Greenland, but responsible investors are better than that.
This dramatic sell-off across the Atlantic has created a gloomy atmosphere for US markets. Investors are rattled as President Trump prepares to head into a meeting with European leaders. At the top of their agenda will be the future of Greenland, a semi-autonomous territory currently stoking US-China trade tensions. The meeting is expected to make progress on seven months of deepening disputes over subsidy and regulatory issues threatening economic ties across the Atlantic.
Fears of retaliation tariffs hang like a Sword of Damocles over all negotiations. President Trump has a track record of threatening European countries with such tariffs. As a result, concerns among traders and analysts have reached the alarm stage as to the impact on global trade. The lack of clarity around these game-changing developments have led to heightened turbulence in the markets. So, many investors are making the decision to liquidate riskier assets and move into more stable options.
Due to these aggressive market dynamics, the US dollar and treasury bonds are both under attack. Traders are increasingly concerned over the prospect of new tariffs and trade barriers. In response, the dollar’s value is plummeting. As a result, investors are hanging on Trump’s every word, balancing the optimistic and pessimistic scenarios that could play out from Davos.
All safe haven assets, including gold and silver, are booming … even as stock markets take a nosedive. Until they don’t, and until they stop continuing to reach new record highs. Investors have poured into these commodities as they look for shelter from the storm caused by the chaos of continuing trade disputes. It’s no wonder gold and silver prices are climbing. This increase is a clear indication that both short-term and long-term investors have come to the conclusion that safety outweighs potential return at this time.