GOLD and how it moves in times of crisis

For years, gold has been considered a store of value. As a physical commodity, it cannot be printed like money, and its value is not impacted by interest rate decisions made by a government. Because gold has historically maintained its value over time, it serves as a form of insurance against adverse economic events. When an adverse event occurs that lingers for a while, investors tend to pile their funds into gold, which drives up its price due to increased demand.

There have been many instances in our history, where war has ignited investment into gold. One particular moment in the 21^st century which signaled a strong movement into gold as a safe haven was the unfortunate event which occurred on 9/11. Another was the Global Financial Crisis in 2008. In both instances gold’s price sored and it returned higher profits than any other financial asset. It’s important to understand at this stage, even though gold has these unique characteristics, it is not a long-term solution for a portfolio hedge or as a safe heaven. Negative news tends to come after more negative news, which changes investor behaviors and tends to worry investors who in turn would sell their positions in gold, thus sending the price down to original levels or even lower.

Some Key Points

• Safe haven investments offer protection from market downswings.
• Precious metals, currencies, and stocks from particular sectors have been identified as safe havens in the past.
• Safe havens in one period of market volatility may react differently in another, so there is no consistent safe haven other than portfolio diversity.

Latest Price Action

Prior to Russia’s intentions of an invasion into Ukraine and fears of war, which is creating upheaval in the political landscape in Europe and around the world, gold was steadily rising in a sideways movement. However this past week you would have noticed a sharp price action jump 3% from $1892.00 to $1973.00 USD (see below), a price that we haven’t seen since 1^st of January 2021 and there is a strong feeling that it could push past this figure as Russia ramps up its invasion into eastern Ukraine. If this happens, we could start to see higher highs as a result, as investors are spooked by the potential turmoil and destabilization.

Gold or XAUUSD, can be accessible in different forms. You can purchase gold bullion in a number of ways: through an online dealer, or even a local dealer or collector. A pawn shop may also sell gold. You are advised to note gold’s spot price – the price per ounce right now in the market – as you’re buying, so that you can make a fair deal. You could also find access to gold in the following ways:

Gold Futures, ETFs that own gold, Mining Stocks, ETFs that own mining stocks, or you if you wish to trade it, you could use CFDs, where you can trade the value of the shiny metal when it goes up or down. Visit our website here to get started with a CFD trading account and start taking advantage of opportunities.

Sources: www.bankrate.com, Investopedia, Tradingview.