It’s natural for investors to wonder how the perpetual uncertainty in today’s world will impact their portfolios. As citizens across the globe watch market prices spike and plummet, their stress levels seem to follow suit. One thing that may provide investors with some solace when it comes to their financials is the good news about gold: the precious metal hit a high note when it reached the $2,000 level for the first time in over a year.

We’ve mentioned before that your portfolio is golden if you invest in the solid spot metal; you can rest assured that it is presently remaining a safety net during this time of crisis. The ratio of supply and demand can noticeably fluctuate when it comes to precious metals and political unrest. Let’s break down exactly what you need to know about how the Russia-Ukraine conflict is currently driving gold prices.

Financial Experts Say Go for the Gold

The market volatility that has ensued as a result of the Russian-Ukraine conflict has led to a historically predictable trend. People are flocking towards “safe haven” investments like gold to pad their wallets and protect their future. We’ve seen this happen time and time again, and history repeating itself has provided a sigh of relief.

Near the end of the Great Depression, U.S. President Herbert Hoover remarked to Franklin D. Roosevelt: “We have gold because we cannot trust governments.” This striking comment has remained concrete and applies to the current political climate.

The sanctions placed on Russia will likely result in a reduced supply of gold; the country is the third largest producer in the world. Stockholders are afraid of supply shortages, and with good reason, so as demand continues trending upwards, it’s likely the price of gold will follow.

Understanding the Economics of Conflict

It’s obvious what happens to the market when a war ensues, but we don’t often think about the why behind the what. Tension between countries causes a wide range of economic impacts as governments utilize their assets to threaten their antagonists. This results in a back-and-forth battle using financial penalties as bullets and our wallets taking the hits. 

In addition to metaphorical causalities, the people lost fighting in battle means the labour force is reduced. Even though Putin had the world believing his armed forces would undoubtedly take a win over the Ukraine, there have already been over 7,000 troop deaths on the Russian side, and the latest analysis of the battle predicts this trend will likely continue. The Ukraine is not giving up the fight, and the outcome of the current conflict has taken everyone by surprise.

Using Gold as a Guard

Even the most experienced investors aren’t always positive about when to purchase precious metals to protect their portfolios from global unrest. The key to honing your skills in this challenging category comes down to having a handle on if the event will result in long-term consequences or if it’s simply a blip of panic. Traditionally, the impacts of war will see longevity economy-wise while brief upsets can be resolved in shorter time frames. It seems to be clear that terms of the Russian-Ukraine conflict, the global economy will experience drawn-out effects.

U.S. Ambassador to Ukraine Marie Yovanovitch shared her predictions with NPR:

“I think that there’s going to be not only a guerrilla war, but there’s going to be civil resistance where, you know, people get poisoned when they go to the restaurant, sharpshooters are on roofs picking off Russian soldiers. It’s going to be long and ugly, but this is a people that fights back.” 

The article notes that an unfinished win for Ukraine is a possibility. Steven Horrell, a senior fellow at the Center for European Policy Analysis, seemed to piggyback on Yovanovitch’s sentiments stating, “this is a scenario that would end in a ‘frozen conflict’ if Russia still held Crimea and the Russian-led separatist areas of eastern Ukraine.”

As noted, there are indicators of how the market will respond to global unrest and gold is a consistent crisis commodity. The team of experts at London Gold Xchange can assist investors on how current events will impact their portfolios and thoroughly explain what trends the market can expect to encounter. Whether you are a risk taker or a conservative investor you can protect your assets with gold bars from 250 grams or gold coins from 1/25 oz.