Trump’s tariff threats over Greenland push hard assets back to centre stage

Geopolitics as a catalyst, not the root cause

Geopolitical risk has rarely been absent in recent years. Ongoing conflicts, sanctions, and trade tensions have become a semi-permanent feature of the investment landscape. What feels different now is the degree to which these risks are intersecting with questions about economic governance and institutional credibility, particularly in the United States.

The Greenland episode matters less for its immediate economic impact and more for what it signals. When strategic assets and territories become bargaining chips between old allies and friends, it reinforces the perception of a more fragmented and less predictable global order. In such an environment, assets that are no one’s liability and that do not depend on a government’s promise to pay naturally gain appeal.

Gold is the first and most obvious beneficiary of this mindset. It has no credit risk, no issuer, and a long history as a store of value during periods of political and monetary uncertainty. In recent months, demand has spread to silver, gold’s more temperamental and volatile sibling, supported by a tight supply outlook and, until recently, its relative cheapness versus gold.

When safe havens stop behaving like safe havens

One of the more striking features of the current move is what has not worked particularly well as a haven. The U.S. dollar, the Japanese yen, and U.S. government bonds have all shown signs of strain at a time when geopolitical risk would normally support them.

Ahead of the U.S. Martin Luther King Jr. Day holiday, long-end Treasury yields spiked higher rather than lower, driven by uncertainty around fiscal sustainability and the future direction of monetary policy. Markets are increasingly sensitive to headlines about the independence of the Federal Reserve and the potential influence of politics on monetary decision-making, particularly as attention turns to who might succeed the current chair.

This matters because Treasuries only function as a hedge if investors believe that inflation will remain anchored and that monetary policy will respond predictably to shocks. When that confidence erodes, bonds can lose part of their defensive appeal. The same logic applies to the dollar. Persistent deficits and a rising debt burden raise questions about how long global investors will be willing to absorb new issuance without demanding a higher risk premium.

Why the world is buying metals

The global appetite for gold, silver, and other real assets such as platinum and copper is rooted in this broader macro discomfort. A softer dollar and expectations of future rate cuts by the Federal Reserve are the most visible drivers, but they are not the most important ones.

This cycle has been supercharged by something deeper: growing unease about fiscal discipline, monetary credibility, and financial stability. Investors are openly questioning how long ballooning government debt and persistent deficits, especially in the U.S. given its central role in the global financial system, can be financed without consequences.

When these doubts intensify, portfolio construction changes. Investors look to reduce reliance on assets that are someone else’s liability and increase exposure to those that are not. Gold benefits first, but it rarely moves alone for long. Silver and platinum tend to follow as investors assess relative value and diversification within the hard-asset space.

Copper’s strength, while driven more by structural themes such as electrification and grid investment, also fits into this narrative. It is both a growth metal and a hedge against underinvestment in real assets, highlighting how the line between cyclical and defensive demand has become increasingly blurred.

Silver’s dual nature: opportunity and risk

Silver sits at the centre of this debate because it is both a monetary and an industrial metal. It benefits from the same fear-based demand that drives gold, while also being tied to secular growth themes including solar energy, electronics, and electrification.

That dual identity is what makes silver so explosive when conditions align. It is also what ultimately limits how far and how fast it can run. Every silver rally eventually encounters industrial demand destruction. At some price level, fabricators and end users simply cannot absorb higher input costs. They attempt to pass them on, cut back on purchases, or look for substitutes.

At prices around USD 90, it is likely that this process has already begun in parts of the supply chain. However, it does not happen overnight, and it rarely shows up immediately in headline demand data.

One notable divergence at present is that, despite the surge in prices, Western-listed silver ETFs have seen net outflows. That suggests a significant share of current demand is coming from elsewhere, notably Asia and especially China, or from more leveraged financial players rather than long-only Western investors. This does not invalidate the rally, but it does change its character and risk profile.

Positioning: stay invested, adjust the balance

Rather than trying to call a precise top in silver, a more robust approach is to think in terms of relative value and risk balance. The gold-silver ratio, currently trades around a 14-year low near 50, well below the long-term average around 70, highlighting that silver has already done a great deal of heavy lifting.

In practical terms, the message is not to abandon silver, but to be mindful of its growing exposure to industrial demand risk at elevated prices. Gold, by contrast, remains a cleaner expression of monetary and credibility concerns, with less sensitivity to end-user behaviour.

In a world where geopolitical friction is rising, fiscal paths look increasingly stretched, and the traditional safe-haven toolkit is behaving inconsistently, hard assets continue to earn their place in portfolios. The challenge now is not whether to hold them, but how to balance exposure between metals whose drivers are converging and those whose limits may soon come into view.

As the Greenland dispute has reminded markets, geopolitics can still move prices quickly. But the underlying reason why the world is buying metals runs deeper than any single headline. It reflects a gradual but profound reassessment of where safety really lies in an increasingly uncertain global system.