Why did Gold become more expensive during the war?

As we know that “a gold price” tends to rise continuously, especially in the midst of economic uncertainty and war, gold prices are clearly very high. What is the exact reason gold became more expensive during the war? ACU PAY will tell you.

War and Gold

From past to present, we often see the price of gold ‘increased’ after wars such as; 

  • 1977-1980 There have been calls for reform or revolution within many countries, including the Iran Revolution in 1978 or the War between Iraq and Iran in 1979, the gold prices rose in times of crisis. In 1977, gold prices rose 23%; in 1978, gold prices rose 37%; and in 1979, gold prices rose 126%.
  • 1990 In the Persian Gulf War, when Iraq invaded Kuwait, gold prices soared again. After years of war, gold prices began to fall to be the same as the price before the war.
  • 2003 The 9/11 incident as well. The price of gold increased significantly, followed by the U.S.-led invasion of Iraq, resulting in the higher price of gold, but when the situation returned to normal, it fell to pre-war prices.
  • 2014 Rumor has it that the United States may intervene in Syria. Gold prices have risen sharply, as well as the United States’ stance toward the ISIS issue. Europe seems to have a crisis that is hard to control. For example, in Austria, the rate of gun purchases has increased dramatically. People are trying to protect themselves from the European refugee crisis.
  • 2022 The Ukraine-Russia crisis showed that gold prices rose at a rate of 6%.
  • 2023 In the current Israel and Palestine crisis, which is a hot issue at the moment, the gold price has risen to 34,100 baht per baht.

It can be seen that in times of crisis or war, gold prices will rise several times and can maintain their value. This is because gold has its own value as a medium of exchange and is also used as an international currency reserve.

Gold is a safe haven asset of investors

The term ‘safe haven asset’ literally means like that. It is a low-volatility asset, it is a safe asset to purchase with a very low risk of loss. Apart from gold, assets classified as safe haven assets are cash, government bonds, and other debt instruments issued by the government and state agencies.

Under normal circumstances, investors expect a lot of profit and dare to risk investing in other assets such as stocks or digital assets that have high volatility. However, when there is a crisis or uncertain situation, investors consider gold as a ‘safe haven asset’ that is not just safe, but the classic safest asset and most popular when it comes to adverse events when other assets are at high risk.

On the other hand, once the war is over, opportunities for return on investment will be opened. Investors move money that had been invested in gold back to other assets that produce more returns. When gold was in lower demand, gold prices fell.

Should we stock gold?

If you want to start buying gold as a safe haven asset, we can invest in gold to diversify investment risk if there is sufficient investment capital capacity and are ready to take risks because gold prices will continue to rise. 

For those who want to invest in gold these days, we recommend studying carefully and choosing gold as you prefer. However, if you have problems with the investment capital, we recommend investing in alternative methods such as gold saving through applications.

We can buy gold without paying a large sum of money, with no minimum amount of money, gradually accumulating gold baht like saving money. After saving gold baht, we can pick it up at the store of that application or sell it on a profit-making app as well.

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