Gold fulfills the nature of a safe haven in uncertain times. Its price has risen by more than 15 percent since the beginning of this year, and even the most expensive in history is trading in crowns. But other precious metals are also doing well, for example palladium and platinum are improving even more significantly.
The gold price expressed in Czech crowns on Friday rose to the highest price in the history of the modern Czech Republic. Yellow metal was also sold for 46,210 crowns per troy ounce, according to Bloomberg data.
The price of gold exceeded the current price record reached during trading on August 7, 2020. At that time, the price of gold rose to almost 46,058 crowns per troy ounce. The trend of appreciation of gold in the koruna on Friday was not reversed even by the intervention of the Czech National Bank for a stronger koruna.
War helps gold. Bitcoin has not proven to be a safe haven, yet
The war in Ukraine has shown what investors consider a safe haven in turbulent times. Gold is, bitcoin is not.
Gold appreciates as a result intense nervousness in the markets, which has not eased since Thursday last week, when Russia launched its invasion of Ukraine. Since then, gold in crowns has appreciated by about seven percent. Since the beginning of this year, gold in crowns has been added by 15.3 percent.
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However, other precious metals are improving even more significantly. Palladium by almost 66 percent, platinum by 23.8 percent and silver by about 18 percent.
The price of palladium in crowns also reached its crown peak on Friday in the period since 1993. The Troy ounce was sold at a price without fifteen crowns corresponding to 70 thousand crowns. Platinum and silver have not yet broken their historical crown record this year.
Precious metals traditionally thrive in an environment of high uncertainty. They are historically perceived as insurance against inflation and also as a store of value in times of war or famine.
Banker Růžička: The war will lead to further inflation. I am waiting for a banking crisis in Russia
Energy, food and production metals will be among the first commodities to become significantly more expensive as a result of the war in Ukraine. Despite this, central banks will probably not be able to raise rates significantly, thinks Trinity Bank head Karel Růžička. An experienced banker explains in an interview with newstream.cz how unprecedented economic sanctions work and what they will lead to.
But it also testifies to gold freezing of the reserves of the Russian central bank, to which the West has resorted unprecedentedly in sanctioning Russia. Gold is the part of Russia’s foreign exchange reserves that the freeze has largely failed to achieve. Many gold investors are betting that Russia and some other central banks – such as China – will increase their two purchases of gold to reserves in the future. This is to reduce their exposure to the dollar and to Western countries in general, such as the euro or dollar or euro government bonds.
Thus, from the point of view of a number of central banks, gold may be an asset that not only preserves value, but which also prevents or limits the impact of the freeze on reserves.
How not to lose weight during the war. Bitcoin is on the rise, commodities are experiencing the best era in 50 years
While stock markets are collapsing due to the uncertainty associated with the war in Ukraine, investor interest is turning to alternative cryptocurrency assets. Due to the looming shortage, the prices of, for example, production metals and other commodities are skyrocketing.
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