Why Gold Is The True Safe Haven for End-of-Times Events (War, Inflation, Currency Collapse, Political Instability)
The comments below are an edited and abridged synopsis of an article by Dana Sanchez
The day after Russia invaded Ukraine, gold jumped to its highest price in more than a year, reinforcing its reputation as a safe haven for risk-averse investors in times of war, inflation and currency collapse.
Pierre Lassonde, chairman emeritus of Franco-Nevada Corp., presented a scenario for gold hitting $10,000.
The longer the Russia-Ukraine conflict lasts, the more profound the effect will be, particularly on the energy market, said Lassonde. If the conflict continues for a month, “I think you’re looking at $200 oil,” Lassonde said.
Medium term, gold is headed towards $2,200 to $2,400, Lassonde predicted. Over the next five years, if the Dow contracts by 20% to 30%, the Dow-to-gold ratio could converge to 2:1, he said. This would imply a $10,000 gold price.
Russia’s central bank said that it would resume buying gold on the domestic market as it tries to find financial stability amid Western sanctions. Russia’s gold reserves total 2,298.53 tonnes, according to World Gold Council.
Goldman Sachs analysts predicted that gold could hit $2,150 in the coming months.
Gold bug Peter Schiff won a debate in August 2021 on whether gold is a better store of value than Bitcoin. Schiff debated Anthony Scaramucci, who argued that Bitcoin’s value is derived from its network which enables peer-to-peer transactions without a third party. It has advantages over gold, Scaramucci said, because of its scarcity, its digital properties, its portability, the fact that its transaction are on the blockchain and its rapid adoption.
Schiff argued that Bitcoin doesn’t have any of the properties that give gold value. While gold’s value is determined by real-world use cases, Bitcoin doesn’t have tangible backing in the real world, Schiff said.
Inflation and rising prices aren’t going away, and we don’t know how this will end. Gold is one of the last pillars of safety in the global financial market. It has no correlation to equities and has no counterparty risk, making it an important diversification tool. As frustrating as gold’s daily price action can be, it is an important asset for investors.