Opinion: It’s time to buy gold, sell U.S. chip companies as U.S.-China trade dispute intensifies

Saturday, April 7, 2018
By Paul Martin

Also consider buying the Japanese yen and Chinese Big Tech

Apr 6, 2018

It seems the understatement of 2018 is to say that the biggest threat to the securities markets is a potential trade war.

A CNBC survey of financial executives at companies collectively valued at more than $4.5 trillion are worried; about two-thirds of the Global CFO Council expect a negative impact on their company.

And that was before this week, when China announced possible tariffs on more than 100 U.S. products that could affect $50 billion worth of outbound trade. President Trump announced late Thursday that he was considering penalties on an additional $100 billion in Chinese goods. And Chinese Commerce Ministry spokesman Gao Feng, in response, said Friday that China “is fully prepared to hit back forcefully and without hesitation.”

Even media outlets normally friendly to the White House, such as Fox News, aren’t buying administration claims that trade wars are easy to win and that there is a “pot of gold” waiting for the U.S. economy on the other side.

There’s good reason for this trepidation, too. History is rife with examples of protectionist trade policies that backfired.

Add it all up, and it’s possible the U.S. economy could slow amid the strife.

But in the meantime, if you’re an investor, how the heck do you trade this mess? There are already a few clear winners and losers worth watching.

Here are three assets to buy, and three to sell based on the latest news:

Three to buy
Buy gold
: It’s reductive but true: Gold is a safe haven in times of trouble. Immediately after news of China’s retaliatory tariffs broke Wednesday, the precious metal spiked dramatically. Gold-backed ETFs such as the SPDR Gold Shares GLD, +0.47% and the iShares Gold Trust IAU, +0.55% have done pretty well.

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