When President Trump declared the United States must own Greenland and then announced the U.S. will take over the territory that is part of the Kingdom of Denmark “whether they like it or not” the price of gold surged. Days later, when the president toned down his rhetoric at the Davos World Economic Forum, saying he “won’t use force” to take Greenland, gold continued climbing, soaring to within a few dollars of $5,000 an ounce, and posting its biggest one-week gain—more than seven percent—since March of 2020. Silver leaped above $100 an ounce.
In the precious metals market, it matters not whether the president backs up his threats with military power. What’s driving the price of gold and silver to new all-time heights is the fact that President Trump is shaking up the world order.
Will the NATO Alliance survive? Will President Trump’s proposed Board of Peace compete with the United Nations for global diplomatic influence? Will the United States attack Iran, and, if not, where will the U.S. use its military power next after forcibly removing Venezuelan President Nicolás Maduro? No one knows the answers. And in a world beset by uncertainty, where bedrock institutions are under threat, and long-standing alliances are in danger of crumbling, investors rush to the safe haven of precious metals.
“Gold is undergoing a sustained re-rating as cracks appear in the post-World War II rules-based order,” said JP Morgan Private Bank strategist Yuxuan Tang. “Investors increasingly view gold as a reliable protection against these hard-to-quantify regime-shift risks.”
Adding to the momentum is the fact that global investors are bailing out of the U.S. dollar, making precious metals—priced in dollars on world markets—more affordable for foreign buyers.
Given that no one knows just how dramatically the world order may change, the outlook for gold remains bullish.
