Is Risk Aversion Set to Take Center Stage?

In a highly provocative act, North Korea conducted another missile test Monday afternoon that set gold, stock index futures and currencies on the move.

The missile reportedly flew over Japan and landed in the Pacific Ocean off the waters of the northern region of Hokkaido. The last time a projectile from North Korea flew over Japan was 2009. The U.S. and Japan believed that launch to be a test of an ICBM, while North Korea claimed it was simply a rocket carrying a satellite into orbit.

This most recent launch represents a new high in tensions between North Korea, the U.S. and its allies. The adjective “provocative” is almost not strong enough, and this latest act of defiance could garner some type of serious response.

Unfortunately, this latest act comes just weeks after North Korea and President Trump traded barbs, with Trump saying in no uncertain terms that a North Korean threat to the U.S. would be met with harsh consequences.

Hopefully, diplomacy and calm heads will prevail, but you cannot deny that this situation could be the closest the U.S. has been to a nuclear conflict since the darkest days of the Cold War. Although hopes for a diplomatic solution remain, diplomacy has failed thus far, and some other type of solution could be explored by the U.S. and its allies. This could potentially take the form of additional sanctions or other means of isolating North Korea.

The North Korean conflict appears to be far from over, and ongoing uncertainty about the North Korean regime and its ongoing efforts to become a nuclear power could keep investors shying away from risk.

Gold prices gapped up after the close of the day trading session once the news hit, following an impressive show of strength during the day that saw prices make a clean break above previous resistance at the $1300 per ounce level.

Gold has been moving higher on a combination of factors in recent weeks including the notion of ongoing low rates, a weaker dollar and a potential top being reached in equity markets.

Market volatility has been essentially absent for quite some time, and the current geopolitical landscape could potentially send volatility skyrocketing higher. A sharp and sudden rise in volatility could send stock investors running for the exits in droves, sparking a massive decline in stock markets in the process. Risk may be shed like a cheap suit, and now may be the ideal time to consider some alternatives that could potentially hold or even increase in value if market volatility sees a sharp increase.

Now may be the ideal time to consider a hard asset like physical gold as a means of portfolio diversification. Physical gold could potentially see a significant increase in price if stocks begin to falter as risk aversion sets in.

Adding an allocation in physical gold has never been easier than it is today, and the yellow metal could be at the beginning stages of a protracted bull market.

Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold real, physical gold using your IRA account.

Don’t wait for a massive spike in volatility and stocks to potentially see significant declines before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.