An interesting black swan type event that does not get much discussion is the inevitability of a very big Tokyo earthquake.
In a sense it is not really a black swan because it is a known known, the black swan bit comes from the timing.
Most people think that because the probabilities are so low (Swiss Re has it at 4% chance over 10 years)that it can be disregarded or not an immediate concern. But... the impact of a big Tokyo earthquake will huge. It will effectively **paralyse** the world's 2nd biggest economy and its financial system for at least 2 weeks.
The impact on the global financial system will of the same order of magnitude (or greater) as the Lehman's Brothers bankruptacy last year. The characteristics will be similar to the black swan qualities of the GFC as will the effects -> root effect will be that global liquidity will evapourate which will then drive a whole heap of other financial turbulence & backwashes.
The fact that JPY will plummet and USD rise in the event of a Tokyo earthquake is obvious but the bit I have been mulling over is -> what will the POG do?
For the 1st week (possibly 2) POG will most likely fall sharply as leveraged positions are unwound due to plummeting global stockmarkets, and because of the flight of cash to USD. However, the USD is not where most people want to be these days as a safe haven (investors will start having 2nd thoughts) and cash will start flowing heavily back into gold. The thing is to be careful about that 1 weeks worth of shock to the POG and what it will do to one's positions and setting up for the rebound.
This is just a thought experiment & pure speculation but I think useful for thinking about some of the possible big swing risks to one's gold positions - irrespective of whether what I have said is valid or not :-)
