Investing in gold in the time of war

There hasn’t been a metal in the history of the world that has held its allure and it value as gold has done over the years. Gold has played a significant role in the world in periods of peace and of conflict throughout the 20th century. In a world that is beset by the risk of physical conflict or the threat of war in countries like North Korea, The Middle East and trade wars between America, China and the EU, Melbourne gold buyers still see it as a way to protect wealth.

The way gold was used, stored and shifted had a profound effect on the economic or military successes in various wars. Gold and Silver have influenced the way the world has shaped itself and laid the foundation for the financial system as we know it.

The Spanish Invasion

Spain had immense stores of gold in the 15th Century. The massive influx of gold made Spain a global super power. They funnelled a lot of the gold they had into their military and into their wars. This immense wealth of gold was not used in the domestic economy. Most of the gold passed through to England and the Netherlands where Spain was buying large quantities of goods. The government was not using the gold to stimulate the economy by investing in the manufacturing sector and various other types of industries it needed to. Spain not only became a military superpower but the world’s biggest importer of goods.  So much of the gold Spain had moved into other productive economies that it began to devalue the other precious metals. The lack of economic development in Spain weakened the country but it also affected future conflicts that Spain would engage in.

World War

There are other examples of how gold served in the American Civil War and in both World War I and II. There are parallels that can be drawn with those too. The countries that had the most gold were able to command larger armies and wage a longer, more intense war.

The 1970s upheavals

The 70’s were volatile. We saw the Iranian Revolution in 1978, the Iraqi-Iran war of 1979, the invasion of the Soviet. The price of gold during that decade rose by 23%, 38% and 126% by the end of that decade.

In the 1990 Gulf War, the price of gold rose sharply in response to the constant threat of war. However, by 1991, the price had softened returning to pre-invasion prices. After the 9/11/2001 attack on the US the price of gold surged high right up to the 2003 US invasion of Iraq. When rumours about the intervention of the US in Syria and efforts to neutralise ISIS began circulating in 2014, the price of gold also went up. During these times, those who had gold to sell could weather the storm much better. Melbourne gold buyers like most other gold traders in the world were experiencing a surge in business from people selling their gold for that much needed cash.

Recently, the European Union has been grappling with the issue of immigrants coming into the country from various war torn nations. This has raised fears in people that potential terrorists could be living amongst them. Terrorists attacks in London and Paris saw an increase in gun sales as people try to arm themselves against potential attacks the price of gold has also risen in response to this perceived threat.

The Bottom line

We are currently at a unique point in our global history. Countries have larger weapons, larger armies, more sophisticated equipment and technology. We also have a more connected financial system than before. The story of gold being used in conflict shows that it is not about the amount of gold a country holds but how it utilises it for the benefit of its citizens. With tensions in Korea and the Trump trade war against China, Syria, the European immigrant crises, Brexit, there is so much fear and uncertainty driving volatile financial markets. This is driving investors to hedge their investments and to protect their wealth by buying and selling gold. If you have gold, the best time to sell would be now, when economic uncertainty and geopolitical tensions are at their highest to visit your leading Melbourne gold buyers today.