Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Fear of War Drives Investors to Gold & Silver
Earlier last week, gold jumped to its highest levels in more than four months as the world saw rising tensions between Russia and Ukraine. As usual, threats of war drove investors to safe havens like gold and silver as the stock market saw declines.
Later in the week, this initial move proved to be a bit reactionary, but gold was still able to maintain prices above $1,330 an ounce. Gold futures deliveries also rose 2.2 percent to settle in at $1,350.30 an ounce.
“It’s a bit of a safe-haven story,” Ole Hansen, a Copenhagen-based commodity strategist at Saxo Bank A/S, told Bloomberg. “The market is pricing some uncertainty, and we need to see an escalation for that to be a driver to take gold higher. If we are seeing a slowdown in economic activity, that obviously also lends support to gold.”
Bloomberg looked at the U.S. Commodity Futures Trading Commission data and found that hedge funds and other money managers increased their bullish positions by 25 percent on gold to 113,911 contracts in the week to February 25, the highest since December 2012.
Joel Crane, an analyst at Morgan Stanley, told Bloomberg that “in times of military conflict, you tend to get an initial knee-jerk reaction, which is what this seems like.”
With recent reports of Ukrainian troops mobilizing and the interim Prime Minister of Ukraine heading to Washington to discuss U.S. support, one can only consider that this conflict is in fact escalating and the United States is likely to intervene. So, expect a similar reaction from investors if the tensions erupt, which could potentially be a HUGE boost for gold.