As we can see from the value of gold over the last five years, the commodity has risen steadily on the back of increased market uncertainty. Although it experienced a drop similar to that felt across the market when the full extent of the Covid-19 pandemic became fully known, gold’s rally was so strong that the asset soared to new all-time highs in the summer of 2020. .
Although the asset’s momentum ebbed in the following months, news of the Russian invasion of Ukraine prompted more investors to move their money out of traditional stocks and fiat currencies and instead line it up with the precious metal.
Compared to just five years ago, the price of gold has grown by 55.11% despite a highly volatile stock market due to factors such as inflation, the pandemic and geopolitical tensions.
Does gold’s recent performance indicate that the asset is the safest place for investors to turn as the stock market continues to reel from widespread uncertainty? Let’s take a deeper look at what to expect from the archetypal safe haven commodity:
Is gold a safe investment in times of geopolitical conflict?
Despite the fact that the value of gold rose to $30 USD from its all-time high in the immediate aftermath, Warren Buffett warned against investors looking to sell their stocks to maintain their liquidity or invest in assets such as gold or bitcoin in response to the outbreak of the war. . Buffett firmly believes that the best way to navigate these uncertain times is to invest in businesses to build wealth over time.
The world-renowned investor and CEO of Berkshire Hathaway told CNBC that he had no interest in selling his shares.
“If stocks are cheaper, you’re more likely to buy them,” Buffett explained. “You are going to invest your money in something over time. The only thing you can be sure of is that if we got into a major war, the value of money would go down.
“I mean, that’s happened in pretty much every war that I’m aware of,” he added. “So the last thing you want to do is save money during a war.”
Despite Buffett’s confidence that investing in stocks will provide greater growth potential over time, the recent rise in inflation rates has had a negative impact on stocks and shares around the world.
The subsequent sell-off in these stocks has presented the market with a new problem that was not present during the 2014 invasion of Ukraine. With this in mind, holding wealth in gold may still be a good option for investors, while the markets they continue to suffer from volatility.
–
