Something in the Air!

What War Means to Gold and Silver

Through centuries of invasions and wars, conquests and collapses, occupations and upheavals, there is one constant:

In such a crisis, the go-to money is some form of gold or silver: coins and bars, jewelry, art, watches, and even silverware and tea sets. 

While wars are one of the worst things in the human experience, they are very good indeed for the price of gold and silver.

With that in mind, one should always be clear-eyed about the prospects for war and realistic about the approach of military confrontations.

Many Americans would be shocked to learn just how close the leaders of both China and Russia believe we are to war.  Both countries are preparing for it.  And both countries, long antagonists, have linked arms with military exercises and other planning for a seeming inevitable war with the United States.

Speaking in response to the recent withdrawal of the US from the Intermediate-Range Nuclear Forces Treaty, the agreement forged by Reagan and Gorbachev in 1987, Russian foreign ministry official Andrei Belousov said, “Yes, Russia is preparing for war.”

“We are preparing to defend our homeland, our territorial integrity, our principles, our values, our people – we are preparing for such a war,” he said.

It is a common view in the Kremlin.  Right now, the largest NATO exercises since the end the Cold War are underway in Scandinavia.  Trident Juncture involves forces from all the NATO countries:  some 50,000 soldiers, 10,000 vehicles, and hundreds of aircraft and navy vessels.

Not only are the military preparations growing, the rhetoric has escalated sharply.  Here, for example, is a recent apocalyptic remark from Russia’s Putin:  “If any nation decides to attack Russia with nuclear weapons, it may end life on Earth.”

China is equally candid about its war preparations.  Says President Xi, “It’s necessary to strengthen the mission … and concentrate preparations for fighting a war.”

While Americans are mostly oblivious to the risks of warfare, US military personnel are not.  According to a poll by Military Times, 46 percent of our active-duty troops believe the US will be drawn into a new war within the year. 

In a future post I will detail something of the ways that trade wars tend to morph into hot wars.  But for now, I will only stress that war between mighty powers causes havoc in their currencies., While gold becomes the go-to money of all nations. 

And now you know one more reason why the world’s central banks are scrambling to grow their gold reserves!

Are you doing the same?