Key information
- Gold could reach new all-time highs above $2,800 before Christmas due to potential global conflict.
- A global war involving major powers like Russia, the United States and NATO would create a “perfect storm” for gold prices.
- Government spending on military operations can lead to an increase in national debt and money printing, which weakens fiat currencies and makes gold more attractive.
The potential escalation of global conflict has led some analysts to predict a significant rise in the price of gold. Matthew Jones, precious metals analyst at Solomon Global, thinks gold could hit new all-time highs above $2,800 before Christmas.
Mr. Jones sees the current war between Russia and Ukraine as one of the main drivers of this potential rise. It highlights the increasingly intense nature of the conflict and the significant military aid provided by Western countries to Ukraine. While this support strengthens Ukraine's position, Mr Jones warns it also raises the stakes and could lead to a dangerous escalation of the war.
The impact on global markets
Russia has repeatedly threatened serious consequences for attacks on its territory, including targeting Western supply routes or the infrastructure of NATO countries. Such actions could trigger a direct confrontation between NATO and Russia, extending the conflict beyond Ukraine's borders.
Mr Jones believes a world war involving major powers like Russia, the US and NATO would create a “perfect storm” for gold prices. It highlights several factors contributing to this prediction: gold's status as a safe haven in times of uncertainty, increased demand for stability from investors amid market turmoil, and potential supply chain disruptions, energy crises and widespread economic sanctions that often accompany major conflicts.
The role of public spending and central banks
Additionally, Mr. Jones notes that government spending on military operations can lead to an increase in national debt and money printing, which weakens fiat currencies such as the U.S. dollar and makes gold more attractive as a currency. as a store of value. It also highlights the role that Russia and NATO countries play in global energy markets, suggesting that a war could drive up oil and natural gas prices, fueling inflation and strengthening the the appeal of gold as a hedge against inflation.
Mr. Jones concludes by highlighting the potential impact of a world war on confidence in international trade and financial systems, which would cause investors and central banks to turn to gold as a tangible asset and universally recognized. He also cites historical trends, noting that gold prices generally tend to rise during periods of geopolitical instability and conflict.
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