WEF says globalization is stalling, Trump mulls ‘Gulf of America’: Analysts see a strong case for holding gold
The trend of globalization continues to unwind and has reached a critical juncture due to escalating geopolitical tensions and instability, according to a flagship report by the World Economic Forum (WEF). Analysts suggest that the environment described in the WEF's latest findings will likely bolster gold's role as a safe-haven asset and a tool for currency diversification.
The WEF's Global Cooperation Barometer, released this week, warns that global cooperation has "flatlined."
The report attributes the decline to a significant erosion in the "peace and security" pillar of the Barometer over the past seven years. WEF analysts highlighted that rising geopolitical tensions and intensifying competition have undermined collective security. Additionally, conflicts and resulting humanitarian crises have reached record levels over the past year, driven by events in regions such as the Middle East, Ukraine, and Sudan.
“This Barometer is being released at a moment of great global instability and at a time when many new governments are setting agendas for the year and their terms ahead,” said Børge Brende, President and CEO of the WEF, in a statement.
The report emphasizes that the decline in global cooperation comes at a time when it is most urgently needed.
“As the largely stable cooperative order that defined the post-Cold War era gives way to a more fragmented landscape, solutions to pressing challenges — ranging from climate action to technological governance — demand collaboration,” the analysts noted.
Despite the overall decline in globalization, the report highlights areas where global cooperation has made progress, such as vaccine distribution, scientific research, and renewable energy development.
“What the Barometer shows is that cooperation is not only essential to address crucial economic, environmental, and technological challenges—it is possible within today’s turbulent context,” Brende said.
Challenges to Reviving Globalization
However, analysts remain skeptical about the prospects of a revitalized globalization trend, particularly as the incoming U.S. President continues to advocate for America-first policies.
On the same day the WEF released its report, President-elect Trump made controversial remarks during a news conference, suggesting the possibility of using economic force to annex Canada.
“We basically protect Canada,” Trump said. “We’re spending hundreds of billions a year to take care of Canada. We lose in trade deficits.”
He also alluded to similar strategies for Greenland and the Panama Canal. “People really don’t even know if Denmark has any legal right to [Greenland], but if they do, they should give it up because we need it for national security,” Trump stated. “That’s for the free world — I’m talking about protecting the free world.”
Trump further proposed renaming the Gulf of Mexico to the "Gulf of America."
Gold as a Haven Amid Geopolitical Instability
Craig Shapiro, Macro Strategist at The Bear Traps Report, wrote on social media that the world is transitioning to a new global order.
“The old system is dying, and a new one will emerge — likely more mercantilist, multilateral, and centered on gold as a neutral reserve settlement asset,” he wrote.
Commodity analysts agree that the evolving multipolar world is likely to support gold prices through 2025.
In an interview with Kitco News, Chantelle Schieven, Head of Research at Capitalight Research, predicted that gold could surpass $3,000 an ounce in the second half of the year, citing growing geopolitical uncertainty.
She added that markets are still assessing Trump’s policy proposals, which she characterized as transactional and part of broader negotiations. “Right now, we are in a ‘wait-and-see’ mode, trying to determine the likelihood and impact of these proposals,” she said. “The big unknown is how aggressively he will pursue some of these policies.”
Ryan McIntyre, Managing Partner at Sprott Inc., echoed this sentiment, expressing a bullish outlook for gold as geopolitical uncertainty weighs on overvalued equity markets.
“With global debt levels at historic highs, gold remains the most attractive asset in a multipolar world,” McIntyre told Kitco News. “Long-term geopolitical uncertainty will continue to underpin gold as a safe-haven asset, outweighing any short-term price fluctuations.”
Source: https://www.kitco.com/