North Korea, Gold, and Fear
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President Donald Trump bluntly warned North Korea against making any more threats to the U.S., saying the country "will be met with fire and fury like the world has never seen." The pundits will take this quote and try to convince you that this is the reason that gold is rallying. We said before North Korea that $1,260 was support in gold and we expected a rally. Here we are at $1,272 and on our way to $1,280
Gold is not the fear trade, gold is a hard asset like real estate or any other asset that you buy and look for appreciation. Fear comes out in the VIX and panic selling in equities and other highly liquid products. Gold looks to have turned the corner and could be headed into a bull market
The dollar correlation between asset classes has left the building for now, all commodities are significantly lower than the last time the dollar was at these levels. If markets become spooked the fear will show up in the VIX, treasuries and the U.S. Dollar.