Investors have piled fresh bets on gold and European defence stocks in response to U.S. President Donald Trump's threats to take control of Greenland, fearing a geopolitical rift that could end NATO, shatter the global order and damage the dollar.
Although gains in both are expected to continue regardless of what happens to Greenland, investors face the dilemma of how to position for any longer-term fallout.
Trump wants to gain control of the Danish territory, through a purchase or even military means, while Greenland does not want to be part of the U.S., a stance supported by Europe and Canada.
While investors have previously largely ignored these aspirations, the U.S. seizure of Venezuela's Nicolas Maduro in a surprise military raid has suddenly made them more tangible.
For investors hoping for less risk after last year's tariff turmoil, the news makes for an uncomfortable start to 2026.
Trump has also weighed intervening in unrest in Iran, while the U.S. administration's threat to indict Federal Reserve Chair Jerome Powell has reignited concerns about its independence.
Gold jumped more than 4% last week after Maduro's capture and hit a new record high on Monday. European defence stocks (.SXPARO), opens new tab hit fresh all-time highs on Monday and last week posted their biggest weekly jump in over five years, with a 10% gain.
"You look at gold prices and they are just screaming that markets are concerned about geopolitical risk," Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, said of the most recent rise in bullion.
Non-yielding gold is traditionally seen as a safe haven for investors during wider market uncertainty or volatility.
Many investors have already been calling for a large exposure to gold, including hedge fund manager Ray Dalio, who last year noted a big relative underperformance by U.S. stocks.
U.S. ambitions on acquiring Greenland could have far-reaching implications, not just for NATO but also efforts to end war in Ukraine and China's tensions with Japan and Taiwan.
If the U.S. forcibly took Greenland from fellow NATO member Denmark, it would likely not only mark the end of the military alliance but the wider balance of power, analysts say.
"It would call into question much more the global order that's essentially largely been established since Bretton Woods II, (or) the end of World War Two, when NATO was created," said Steve Kolano, CIO at Integrated Partners.
If Europe must rely less on the U.S. for its defence, it is no surprise that investors are buying European defence stocks, a sector that's more than tripled since Russia's 2022 invasion of Ukraine.
German tank maker Rheinmetall (RHMG.DE), opens new tab rallied 19% last week, while Sweden's Saab (SAABb.ST), opens new tab surged 22%.
"With the rhetoric about Greenland, the rally is being sustained," said Jeremie Peloso, chief European strategist at BCA Research.
Although gains in both are expected to continue regardless of what happens to Greenland, investors face the dilemma of how to position for any longer-term fallout.
Trump wants to gain control of the Danish territory, through a purchase or even military means, while Greenland does not want to be part of the U.S., a stance supported by Europe and Canada.
While investors have previously largely ignored these aspirations, the U.S. seizure of Venezuela's Nicolas Maduro in a surprise military raid has suddenly made them more tangible.
For investors hoping for less risk after last year's tariff turmoil, the news makes for an uncomfortable start to 2026.
Trump has also weighed intervening in unrest in Iran, while the U.S. administration's threat to indict Federal Reserve Chair Jerome Powell has reignited concerns about its independence.
Gold jumped more than 4% last week after Maduro's capture and hit a new record high on Monday. European defence stocks (.SXPARO), opens new tab hit fresh all-time highs on Monday and last week posted their biggest weekly jump in over five years, with a 10% gain.
"You look at gold prices and they are just screaming that markets are concerned about geopolitical risk," Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, said of the most recent rise in bullion.
Non-yielding gold is traditionally seen as a safe haven for investors during wider market uncertainty or volatility.
Many investors have already been calling for a large exposure to gold, including hedge fund manager Ray Dalio, who last year noted a big relative underperformance by U.S. stocks.
U.S. ambitions on acquiring Greenland could have far-reaching implications, not just for NATO but also efforts to end war in Ukraine and China's tensions with Japan and Taiwan.
If the U.S. forcibly took Greenland from fellow NATO member Denmark, it would likely not only mark the end of the military alliance but the wider balance of power, analysts say.
"It would call into question much more the global order that's essentially largely been established since Bretton Woods II, (or) the end of World War Two, when NATO was created," said Steve Kolano, CIO at Integrated Partners.
If Europe must rely less on the U.S. for its defence, it is no surprise that investors are buying European defence stocks, a sector that's more than tripled since Russia's 2022 invasion of Ukraine.
German tank maker Rheinmetall (RHMG.DE), opens new tab rallied 19% last week, while Sweden's Saab (SAABb.ST), opens new tab surged 22%.
"With the rhetoric about Greenland, the rally is being sustained," said Jeremie Peloso, chief European strategist at BCA Research.
