Russia vs. Ukraine Effect on Gold

Russia Invades Ukraine & Gold May Reach New Records

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Recently, Russian President Vladamir Putin sent what he called “Russian peacekeeping forces” into Eastern Ukraine. By many perspective indications, this is an invasion. As with many wartime actions, the price of gold started to rise significantly on the news of this military action. Our executives at Allegiance Gold stay up to date with all the news around the world that will directly affect the price of gold or the prices of other precious metals. After reading this article, make sure to call us at 844-790-9191 for more information on what is affecting the price of gold, and how to receive a FREE Gold IRA Guide. Here’s a look at how Russia Vs. Ukraine conflict may affect the price of gold. 

Gold Proposers During War

Gold has a history of rising during any type of war. Right now, the price of gold is rising towards $2,000 per ounce. This is less than $200 an ounce from an all-time high. Why is gold rising? Well, during war, currencies and other assets – such as stocks – become unstable. Since gold is the oldest form of globally recognized money, people will safeguard their money in the yellow metal during times like these. 

Gold Moving with Oil 

In addition to gold, oil also tends to move during times of war. Right now, the price of oil is nearing $105 per barrel. So what does this have to do with gold? Well, what we are seeing right now is a general move into commodities. During times of economic stability, people will put their money into strokes and speculative assets. However, during times of war, people will want to store their wealth into something that is finite, tangible, and has some form of utility. 

Money Likely to Flee Ruble and Russian into Gold

Also, it is likely that those who have their wealth in the Rubble – the Russian currency – are fleeing to gold as the United States and Europe places economic sanctions on the Russians. Currently, the Ruble is losing value against the U.S dollar, the Euro, and gold. A number of Russian oligarchs are also feeling the pinch with personal sanctions. Therefore it will be no surprise if wealthy Russians move out of ruble and into gold.

Additionally, the Russian stock market has lost 10% of its value since the beginning of the invasion. There is little doubt that the loss of that selling has led to the buying of gold. 

Moving to All-Time Highs 

The Russian and Ukraine conflict is also pushing gold to fresh all-time highs. Currently, the all-time high for gold is $2,074 which was reached in August 2020. If the conflict continues, then we will likely see gold hit new highs. This can include mainstream investors buying physical gold, investing in gold ETFs, and opening gold IRAs.  If that happens then we can begin to see speculative income come into the precious metal. This can spur a whole new level of buying. 

Hedge on Equities 

Additionally, we are seeing stocks fall around the world have taken a hit from inflation and the fallout from the COVID-19 pandemic. Soon after the Russian invasion into Ukraine, the U.S. stock market fell to fresh new lows, making a bear market in equities much more likely. If this happens, then we could see more money go into gold. This can create a cascading effect where we could see a potential long-term bull market in the precious metal. 

Long-Term Sideways Action Finds Breakout Event 

Looking at gold before the Russia, Ukraine conflict, we could see that the precious metal was moving sideways for almost 24 months. Usually, when an asset moves in a tight range for a long time, it will either explode up or down. Because of the conflict, gold was pushed higher out of the tight trading range. 

An Asset That Can be Held Privately 

Finally, war has a way of disrupting the free flow of money. As an example, many Russian oligarchs are now facing sanctions. Many Ukrainian banks may fail if the country is taken over by Russia. That means that a number of people will scramble to transfer their wealth into something that can be privately held and transferred such as physical gold. As the conflict continues, we may see more buying of physical gold bullion. 

Will Gold Continue to Rise If War Continues? 

Gold may likely continue its rise as the Russia, Ukraine conflict shows no signs of abating any time soon. If the price of gold hits all-time highs, then we may see gold go into a secular, long-term bull market. For more news on the war, the price of gold, and to receive your FREE Gold IRA Guide, make sure to call Allegiance Gold at 844-790-9191 or fill out the form below!