Ryan Stancil,
Editor
Jan. 21, 2022
On top of everything else the world is dealing with going into 2022, the shadow of war is looming.
That’s the story out of eastern Europe as tensions flare between Russia and the West over Ukraine. Russia is building a military presence along the border it shares with Ukraine, and some are raising the alarms that an invasion is imminent.
You may remember when Russia took the Crimean peninsula in 2014.
Some are seeing this as Putin taking the next logical step to restoring something that resembles the Soviet Union. Some are seeing it as something of a fakeout on Putin’s part. He may simply be posturing to discourage Ukraine from joining NATO while also trying to gain more influence in the region.
The history between Russia, Ukraine, and the West is a long and complex one that fills entire books. No one knows for sure whether or not war is going to break out, but even the possibility of it happening is something to consider.
War has long been tied to economic outlook, with certain industries and sectors thriving under the threat of conflict. That’s especially true for the value of gold.
Back in the 1970s and 80s, the world saw the Iranian Revolution, the Iran-Iraq War, and the Soviet Union’s invasion of Afghanistan. The value of gold skyrocketed during all three of these incidents.
It happened again in 1990 when Iraq invaded Kuwait.
During 9/11, when war seemed inevitable, it soared.
When the US invaded Iraq in 2003, it soared.
The same could happen again if Russia decides to invade Ukraine and the US and other western countries get involved.
This cycle repeats itself because war is expensive. Money gets printed, government spending goes way up, and investors look for a hedge. Gold has been a traditional safe haven in exactly those kinds of times, which is why they always go back to gold when it seems like war can’t be avoided.
The yellow metal has been largely holding steady these past few years and looking better in the past few months. Thanks to factors like the US 10-year Treasury yield hovering around 1.8%, gold has been given room to move higher. It’s been doing just that, albeit slowly.
When you consider that this year might be more economically volatile than last year, that’s another advantage gold has. Possible economic slowdown could see those holding some gold in their portfolios doing very well while other areas of the market flounder.
In short, gold has a lot going for it in the very near term. At this point, it’s anyone’s guess whether or not the West will get into some kind of conflict with Russia.
But economic uncertainty is almost a given thanks to continued inflation and governments grappling with how to deal with it.
As an investor, you can prepare for the possibilities by buying into gold plays that are sure to benefit when and if these things come to pass.
As gold experiences a new bull market, there’s one play that’s set to do very well.
Learn all about just why gold is likely to take off soon and why this one gold play will outshine many of the others when it does.
Keep your eyes open,
Ryan Stancil
Editor, Daily Profit Cycle