The Midas Touch: How Gold And Other Precious Metals Affect Today's Global Economy

The effects of the pandemic have led to what we are now referring to as ‘Today’s Global Economy’. This economy is colored by uncertainty, risks, falling prices in so many sectors, foreign exchange fluctuations, and changes in inflation.

Everything and everyone is affected. Prices of commodities have gone up. Spending on items that don’t qualify as essentials is largely avoided, while cash has become a precious commodity.

Take gold, for example. 

The price of gold climbed to a record high last summer as investors poured their money into the precious metal amidst fears about the impact of the coronavirus pandemic on the global economy.

To say that gold has maintained its Midas touch would be stating the obvious. Through the years and with each global economic recession or pandemic, gold and other precious metals stand tall as the choice asset block for safekeeping, preserving, and increasing the value of available wealth. This empowers both individuals and the global economy for economic survival.

For investors, gold and other precious metals are safer and more quantifiable commodities in terms of value than any cryptocurrency or form of investment. During recessions or global pandemics, businesses are susceptible to failure by way of huge losses, excess credit burden, or a drop in the price of products. Other forms of investment that depend on the forces of demand and supply are also risky at such times. Making precious stones such as gold notably valuable.

“An investment in gold is an investment in the economic viability of the global economy,” said Tim Henneberry, CEO of Golden Independence, a gold exploration and development company in Nevada. “No other investment guarantees a safe haven as much as gold does.”

Gold remains a safe haven for investors, companies, and countries who are looking to preserve their wealth in the face of a global economic recession or a pandemic. As Warren Buffett once said, "Gold is a way of going long on fear". 

Precious Metals And The US Economy

The U.S. stock market and stock markets all over the world are largely dependent on confidence. When this confidence disappears, it affects the performance of the market. During a recession or pandemic, people fear that currency may become worthless. So they move their investment to more reliable stores of value like precious metals.

The Guardian reported how the rise in gold came as Chinese authorities took over the U.S. consulate in the city of Chengdu. This closure order was issued by the Chinese authorities as a response to Washington’s order for the Chinese consulate in Houston to be shut. As the world’s leading economy, anything that affects the U.S. economy has effects on the global economy.

Analysts in the U.S. believe that the price of precious metals is going to further increase on the heels of the rising geopolitical tensions as well as the internal tensions from the recently concluded elections.

Precious metals like gold and silver are reliable stores of value. They are available enough to be traded and limited in supply enough to be considered valuable. From exploration to distribution, the gold market alone is a fruit for all seasons. Today’s global economy is lucky to have the Midas touch, which has allowed it to survive the toughest of seasons.