• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • About Us
  • Budget
  • Business
  • Lifestyle
  • Health
  • Home & Garden
  • News
  • Online Magazine
  • Success
  • Contact Us

Piccolo Universe

Piccolo Universe

  • Did you know that hanging family photographs in your home can improve your children’s confidence? Photos of your kids (and your entire family) prominently displayed in your home communicate that you value them and that they are important family members. The photos let them know they are seen. Not only that, but family photos on… [Continue Reading]

    Read More

    How to Create a Family Photo Wall in Your Home
  • Lavender is a member of the Lamiaceae family and is a perennial herbaceous plant. It grows across the world’s temperate regions, including Europe and North America. The lavender plant can grow up to 2 feet tall. It has gray-green leaves that are oval in shape. The flowers are usually purple, but they vary in color… [Continue Reading]

    Read More

    What You Need to Know About Lavender Plant 
  • Sewers facilitate proper waste disposal from buildings to the designated points to maintain a clean and healthy space. The whole system is designed so that it doesn’t interfere with the comfort of the building dwellers and helps the waste management teams function well. Sewer lines cause a lot of havoc to individuals since it spreads… [Continue Reading]

    Read More

    Quality And Reliable Sewer Services For Various Buildings 
  • During the past 10 years, people all over the world have become increasingly receptive to blockchain and cryptocurrencies. Initially, cryptocurrencies were viewed as a serious threat to both local fiat money and governments. However, many former crypto opponents are now pushing for its adoption after witnessing its many benefits, according to Dan Schatt and Domenic… [Continue Reading]

    Read More

    Earnity Expert Dan Schatt: Crypto Is Expected to Grow Even More in 2022, and Here’s Why
  • For small business owners, figuring out how to accept mobile payments can be overwhelming. Fortunately, that’s where Earnity, a new cryptocurrency marketplace, comes into play, according to Dan Schatt and Domenic Carosa, the fintech experts at the marketplace. Here is a rundown on why mobile payments matter in business and how the platform can help… [Continue Reading]

    Read More

    Dan Schatt: Earnity Helps Businesses to Capitalize on Mobile Payments

April 5, 2022

Gold, Inflation and the Russian Ukrainian Crisis

Anyone who has followed gold or has invested their money in this precious metal should be aware of the factors that drive the price of gold. Simply put, gold is moved by supply and demand and investor behavior. A lot of investors know that gold is a great hedge against inflation but that is not all; it seems simple enough. When paper currency loses its value then gold then it’s plausible that gold would gain in value especially since gold is available in known quantities, supply remains relatively constant. We also know that gold reacts to economic and political conditions this is why savvy investors put more stock in physical gold than in paper currency.

Inflation and gold

High inflation rates push gold higher, a drop in inflation results in the deflation of the gold price. This might not always be the. case when inflation rises the price of goods and services also rise always be the case. The important thing to keep in mind when considering inflation and its effect on gold you would have to look at the other factors as well. Inflation on its own is no guarantee of a rise in the price of gold. More scrutiny is put on inflations because it is used as a measure of economic growth. Central banks react to inflationary situations by increasing currency supply. However, expanding the supply of money dilutes the value of the currency in circulation. This makes it more expensive to buy gold or other metals that are regarded as precious.

Another factor is the movement of specific currencies like the U.S Dollar. A weakening U.S dollar has been pivotal in pushing gold prices higher. The biggest movers of the price of gold are Central Banks. As the world is left reeling because of its invasion of the Ukraine. Governments across the globe have issued strong words condemning Russia’s war effort. The markets have pretty reacted as expected.

Central Banks are the biggest movers of gold. When a country’s foreign exchange reserves are big and the economy is stable, a country’s central bank might sell some of the gold it has to focus on assets that generate returns like stocks and bonds.

Central banks manage their gold assets pretty much like a cartel so as not to cause big disruptions in the market. There’s an agreement that some countries have signed off on known as the “Washington Agreement.” This is a non-binding, gentlemen’s agreement that states the central banks will sell less than 400 tons of gold per annum. Unloading a lot of gold too fast can disrupt the market significantly.

Russia’s invasion of the Ukraine, has brought back the question of why the Russian Central Bank has been buying up so much gold since 2000 – was Russia bracing itself for what we are seeing now? Was Russia stashing gold in preparation for this? In the not-so-distant past, all Russia had to worry about were U.S sanctions. Now it is not just America using sanctions to bring the Russian political agenda to heel, the entire European Union has joined in imposing various restrictions and sanctions against Ukraine. Russia cannot turn to gold to bolster its economy as the Ruble goes tumbling down. The safe-haven status of gold will not work if there are no countries willing to buy Russian gold. Russia is sitting with a stockpile of gold worth $140 billion and sanctions that forbid the European Union, Britain, and the U.S from buying Russian gold.

Anyone who has followed gold or has invested their money in this precious metal should be aware of the factors that drive the price of gold. Simply put, gold is moved by supply and demand and investor behavior. A lot of investors know that gold is a great hedge against inflation but that is not all; it seems simple enough. When paper currency loses its value then gold then it’s plausible that gold would gain in value especially since gold is available in known quantities, supply remains relatively constant. We also know that gold reacts to economic and political conditions this is why savvy investors put more stock in physical gold than in paper currency.

Sanctions aren’t the only measures crippling the Russian gold market. The esteemed London Bullion Market association also suspended some Russian refineries from its accredited good delivery listing. This means that the country is will be restricted from buying or selling gold products in key global markets. All these restrictions may lead to gold being traded internally. With the ruble being as low as it is many will turn to gold just like Venezuela did.

This article was brought to you by

Melbourne Gold Company

Suite 701, Level 7 /

227 Collins St Melbourne VIC 3000

(03) 8678 2085

https://www.melbournegoldcompany.com.au/

Join the discussion on this topic with Piccolo Universe Blog by visiting our contact page

Filed Under: Blog

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

About Us

Hey guys it’s Adam! I am a writer, a blogger, and a curious human being full of ideas. I remember as a teenager going to my local store to grab a freshly published magazine about the ins and outs of the online business world. Read More…

Facebook

The Piccolo Universe

Lets Connect

  • Facebook
  • Instagram
  • Twitter

Newsletter

How to Create a Family Photo Wall in Your Home

What You Need to Know About Lavender Plant 

Footer

About Us

Hey guys it’s Adam! I am a writer, a blogger, and a curious human being full of ideas. I remember as a teenager going to my local store to grab a freshly published magazine about the ins and outs of the online business world. Read More…

Popular Post

How to Create a Family Photo Wall in Your Home

Newsletter

Copyright© 2023 · Dear Theme Piccolo Universe