Februar 2022.godine.
THE RUSSIAN INVASION OF UKRAINE
The Russian invasion took the world by surprise. Citizens of Ukraine rushed to banks in order to withdraw cash and ensure that their financial reserves remained close at hand. This caused major crowds and long lines in front of banks. A nearly identical situation unfolded at gas stations, where people waited in line to obtain fuel.
In response to the invasion, economic sanctions were imposed, including the exclusion of certain Russian banks from the international SWIFT payment system. The war and economic sanctions also frightened citizens of Russia. Images of long lines in front of banks across Russia quickly spread around the world. Russian citizens attempted to withdraw their cash out of fear for the stability of the ruble. Due to severe Western sanctions, the ruble fell to a historic low, recording a dramatic decline of 26% in a single day. Russia introduced measures prohibiting foreign citizens from taking cash out of the country. Meanwhile, the United Nations overwhelmingly condemned the Russian invasion and called for an immediate end to the conflict.
February 28 became a day that frightened the entire world and triggered countless financial and structural disruptions. Voices of reason were heard across the globe, calling for an immediate end to the conflict. Citizens feared the possibility of an impulsive confrontation between Russia and the NATO alliance, which could have caused unimaginable consequences. Uncertainty and unrest pushed gold to a new historic high. In just a single day, gold increased in value by six percent (6%). Gold reacts to global instability by increasing in value. Demand for gold shattered all previous records. Only two days after the invasion, leading gold manufacturers showed zero availability across all inventory accounts. Becoming the owner of even a single gram of gold became a true privilege.
COVID 19, triggered a global pandemic.
It appeared unexpectedly in 2020 and placed the entire world in the same situation. A global struggle began against an unseen and extremely dangerous enemy. Every day, people fought to protect their loved ones — grandparents, neighbors, friends, and families. Unfortunately, the disease was severe and claimed many lives each day. All segments of society became involved in the fight, including both the military and civilian sectors. The best protection came from the recommendations issued by the World Health Organization: Social distancing and staying at home.It turned out that our immunity initially protects us. Immunity is not created overnight, it takes some time.
COVID 19 has changed the subjective and objective life of every person.
COVID-19 largely paralyzed economic activity around the world. Governments introduced emergency measures in an effort to protect and stabilize their economies. The global gold market did not remain immune to these disruptions.
A major disturbance occurred when the world’s largest gold producers suspended production in order to protect their workforce and prevent the further spread of the disease.
If we want to build financial resilience, COVID-19 clearly showed us that this cannot be done during extreme situations like this one.
Just as vitamins are considered one of the best ways to strengthen the human immune system, purchasing gold is one of the best ways to build financial security and resilience.
Every individual and every company can protect their capital and assets in this way. If the previous direction of global economic trends changes due to the pandemic, the price of gold could rise significantly. We sincerely hope, and as part of society we will continue to work toward preventing such outcomes.
Investment gold can also be converted into cash even during extreme situations such as this one. Reputable companies around the world have enabled the scheduled execution of such requests for their clients.
THE GREAT ECONOMIC RECESSION OF 2008
Before the pandemic, a similar phenomenon affected the global gold market in 2008. That year, the world entered a severe economic recession, whose peak impact occurred in 2011. In 2009, the International Monetary Fund officially declared a global recession.
Observing the scale and intensity of the crisis, the IMF concluded that it was the largest recession since World War II. The recession was preceded by the American financial crisis of 2007–2008 and the U.S. mortgage crisis of 2007–2008.
To understand the magnitude of the recession’s negative impact, it is enough to look at gross domestic product growth rates.
In the years before the recession, GDP growth ranged between 5% and 7%, while during the recession years it dropped to between 0% and 1%.
The recession did not affect the entire world equally. North America and Europe suffered the most, while China and India continued to record significant economic growth during those years. The years preceding the crisis were characterized by excessive growth in asset prices. Real estate, companies, securities, and other asset classes experienced dramatic increases in value. As a consequence of the crisis, there was a sharp decline in economic activity, a reduction in international trade, rising unemployment, and falling prices of goods and services. Some economists described it as the greatest crisis since the Great Depression.
During the period affected by the recession, the sale of gold was completely suspended, while its value increased by an extraordinary 280%.
A recession is an economic phenomenon in which GDP (Gross Domestic Product) of an economy declines for two consecutive quarters. A recession is considered a normal occurrence within the economic cycle, where after several years of economic growth, a period of reduced economic activity follows.
Over the past century, United States has experienced 14 recessions. They most commonly occurred approximately every five years and typically lasted longer than one year.
THE GREAT ECONOMIC CRISIS – THE GREAT DEPRESSION OF 1929
The Great Economic Crisis, also known as the Great Depression, was a global economic collapse that began in 1928 and lasted until 1939. It was the longest and most severe economic downturn ever experienced by the industrialized Western world. The crisis began in the United States with the stock market crash on October 29, 1929, a day known as “Black Tuesday.” It resulted in a dramatic decline in economic output, a massive rise in unemployment, and severe deflation. However, the cultural and social consequences were equally devastating, especially in the United States, where the Great Depression is considered the second most destructive event in terms of its impact on society, immediately after the American Civil War.
The beginning and severity of the Great Depression varied from country to country. The depression was particularly severe and prolonged in the United States and in many European countries, where unemployment reached 25% and even 33%. It was less severe in Japan and much of Latin America. The worst depression in modern history was the result of a combination of several factors. A collapse in aggregate demand, financial panic, bank runs, and unsynchronized economic policies implemented by national governments caused a dramatic decline in economic output and severe economic shocks.
The gold standard, which closely connected countries around the world through a network of fixed exchange rates, played a key role in transmitting the American economic collapse to other nations. Recovery from the Great Depression was largely driven by abandoning the gold standard and introducing policies of fiscal expansion (as well as monetary expansion, although monetary policy at that time had not yet been fully developed). Such measures would not have been possible under the constraints of the gold standard system. The Great Depression led to fundamental changes in economic institutions and brought John Maynard Keynes to the forefront of economic theory and policy. In addition to establishing the foundations of macroeconomics and the doctrine of fiscal expansion, Keynes is also remembered for his famous statement: “In the long run, we are all dead.”
Shortly after the abolition of the GOLD STANDARD, the price of gold increased an incredible elevenfold.
