{"id":25244,"date":"2017-09-05T08:57:14","date_gmt":"2017-09-05T13:57:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=25244"},"modified":"2017-09-05T08:57:14","modified_gmt":"2017-09-05T13:57:14","slug":"using-gold-to-hedge-korea-nuclear-war-risk-this-is-how-to-do-it-according-to-goldman","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=25244","title":{"rendered":"Using Gold To Hedge Korea Nuclear War Risk? This Is How To Do It, According To Goldman"},"content":{"rendered":"

Using Gold To Hedge Korea Nuclear War Risk? This Is How To Do It, According To Goldman<\/a><\/h3>\n
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In a note on the role of gold as a “geopolitical hedge of last resort<\/em>“, Goldman chief commodities strategist, Jeff Currie, writes that while it is tempting to blame the rally in gold prices on recent events in North Korea – which have certainly helped create a bid in gold – they only explain a fraction, or ~$15\/oz of the more than $100\/oz rally since mid-July. Instead, Goldman finds that the events in Washington over the past two months play a far larger role in the recent gold rally coupled by a sharply weaker dollar.<\/p>\n

Currie writes that Goldman’s market strategists have found that Trump\u2019s approval rating is a good proxy for this “Washington risk” with a high correlation to both interest rates and gold prices (see Exhibit 1).<\/p>\n

The Washington risk premium is highly correlated to Trump’s approval rating
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Goldman also notes that the Trump risk premium is reflected in both real interest rates and a weaker US dollar account for 85% of the price movement in gold prices this past year.<\/p>\n

The Trump risk premium as reflected in real rates and the US dollar (as reflected in a basket of EM FX) explain 85% of the price movement
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So what about the risk, or threat, from a North Korean escalation, potentially culminating with a nuclear exchange? Here Goldman is more skeptical about the causal linkage between the growing risk level and the price of gold.<\/p>\n

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The view that North Korea is a stable equilibrium is consistent with a lack of a large North Korean risk premium in gold prices and consistent with the history of gold prices.<\/p>\n<\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Using Gold To Hedge Korea Nuclear War Risk? This Is How To Do It, According To Goldman In a note on the role of gold as a “geopolitical hedge of last resort“, Goldman chief commodities strategist, Jeff Currie, writes that while it is tempting to blame the rally in gold prices on recent events in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[15878,374,15877,376,15879,1110,1111,4318],"class_list":["post-25244","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-geopolitical-hedge","tag-gold","tag-gold-etf","tag-goldman-sachs","tag-jeff-currie","tag-paper-gold","tag-physical-gold","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/25244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=25244"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/25244\/revisions"}],"predecessor-version":[{"id":25245,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/25244\/revisions\/25245"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}