Gold
Gold prices have risen this week as Russia implements the gold standard. When gold prices rise, it indicates that the economy is in bad shape. This is due to the fact that investors seek to buy more gold in order to protect their assets from an economic downturn or inflation. And as demand grows, so does the cost. When prices are low, on the other hand, the economy is in great shape. Real estate, bonds, and equities become more successful assets as a result. As a result, gold demand is low. The main takeaway is that gold prices reflect commodities traders' opinions and beliefs. They will, for example, buy more gold if the prevailing opinion of the economy is negative. If investors believe the economy is doing well, they will buy less.
Uneasy investors boosted the price of gold to an all-time high (to date) of $ 1,917 per ounce a few years into the Great Recession, before dropping back to around $ 1,880. The high prices were caused by debt problems in the United States and Europe, which prompted investors to purchase gold. Fast forward two years and the most significant price drop in gold occurred between October 2012 and July 2013. The dramatic drop was attributed by experts to the strengthening of the US dollar during those two years. Commodity prices, such as gold, fall when the dollar strengthens versus major currencies. This is due to the fact that many overseas customers acquire gold in dollars. They have more purchasing power when the dollar is weak. As a result, gold demand rises.
After falling to a low of $ 1060 per ounce in January 2016, the price began to rise in 2018. On December 24, 2018, the major market indexes in the United States almost entered a bear market. The dollar's currency strengthened against its counterparts in 2018, rising from 120 to 128 cents. Dollar-denominated assets, on the other hand, were more appealing to investors, so they moved their money to the United States. Given all of these negative macroeconomic variables, gold's performance this year was respectable. Fears of a rising pandemic and its economic consequences drove investors to gold as a safe haven. Following the coronavirus epidemic, global markets entered an abrupt bear market in March 2020.
Silver
Silver has also witnessed a surge in demand this week. The price of silver is determined by a number of factors. The first is the price of silver mining. Fortunately, in comparison to gold mining, this cost is extremely modest. Silver is also quite easy to get by, unlike gold. There are numerous silver mines operating today, delivering silver to a wide range of industries. That implies there's a big chance the silver market will keep growing. Silver is also used in a wide range of fields due to its strong composition, malleability, and conductivity.
Silver's price is rising due to increased demand from tech companies, manufacturing operations, and other businesses, making it a terrific and safe investment. Finally, the jewelry business plays a significant role in the price of silver. Silver demand is strongly linked to the state of the jewelry business because it is one of the most popular precious metals used in a range of jewelry. The price of silver rises as demand for jewelry rises in India, China, and other countries.
Russia
Russia has instituted a gold standard in its economy and is utilizing it to maintain currency stability. According to reports, Russia is considering returning to the gold standard, a monetary system in which the Russian Ruble is connected to a set gold value. On Thursday, a Russian politician revealed that the government intends to approve legislation eliminating a 20% value-added tax on gold investments. This will help to stabilize Russia's financial industry and allow individuals to invest in precious metals other than the dollar.
The draft bill had been submitted to the Duma, parliament's lower house, according to the MP. If passed, the bill will assist Russia in lessening the impact of sanctions imposed by numerous powerful countries. Sanctions on Russia caused the Ruble to fall almost 30% versus the dollar on Monday. Experts currently feel that the proposed bill will alleviate the sanctions' impact on the Russian financial sector.
Episode 3: Gold, Silver, & Russia