Gold has been a popular investment option for centuries due to its inherent value and scarcity. However, the value of gold bullion isn’t fixed but rather fluctuates based on a variety of factors, including political and economic events. Below, the precious metals experts from First National Bullion, the best place to buy gold in Scottsdale, explore the impact of political and economic events on the value of gold bullion.

Political Events

Political events can have a significant impact on the value of gold bullion. These can include changes in government policies, political instability, and geopolitical tensions. The following are some specific examples:

• Government policies – Changes in government policies can have a substantial impact on the value of gold. For example, if a government decides to increase interest rates or tighten monetary policy, the value of gold may decrease as investors seek higher returns elsewhere. Conversely, if a government implements policies that weaken their currency or lead to inflation, the value of gold may increase as investors seek a safer asset.
• Political instability – Political instability can also impact the value of gold. If there is unrest or uncertainty in a region or country, investors may flee to the safety of gold. For example, if there is a coup or civil unrest in a country, the value of gold may increase as investors seek a safe haven.
• Geopolitical tensions – Geopolitical tensions can also impact the value of gold. If there is tension between two or more countries, investors may become concerned about the potential for conflict or disruption to the global economy. In such cases, the value of gold may increase as investors look for a safe haven.

Economic Events

Economic events can also have a major effect on the value of gold bullion. These can include changes in interest rates, inflation, and the overall health of the global economy. The following are some specific examples:

• Interest rates – Changes in interest rates can affect the value of gold. When interest rates are high, investors may seek higher returns elsewhere, causing the value of gold to decrease. Conversely, when interest rates are low, investors may seek the safety of gold as a store of value.
• Inflation – Inflation can also impact the value of gold. When inflation is high, the value of currency decreases, leading investors to seek the safety of gold as a form of protection against inflation.
• Global economic health – The overall health of the global economy can also impact the value of gold. During times of economic instability or recession, investors may seek the safety of gold as a buffer against economic uncertainty.

Examples of Political & Economic Events Impacting the Value of Gold

In the last two decades alone, world politics and economic events have had a major impact on the value of gold at specific times. Examples include: 

• The 2008 financial crisis – This financial crisis caused a significant increase in the value of gold. Investors became concerned about the stability of the global economy and sought the safety of gold in the face of economic uncertainty.
• The 2016 Brexit vote – The Brexit vote caused a considerable increase in the value of gold. Investors became concerned about the potential impact of Brexit on the global economy and turned to gold as a hedge against economic insecurity.
• The 2020 COVID-19 pandemic – The COVID-19 pandemic caused a large increase in the value of gold. Investors became concerned about the potential impact of the pandemic on the global economy and sought the security of gold as a cushion against economic uncertainty.

The value of gold bullion is impacted by a variety of factors, including political and economic events. Changes in government policies, political instability, and geopolitical tensions can all impact gold bullion’s value. Similarly, changes in interest rates, inflation, and the overall health of the global economy can also affect the value of gold. Investors who wish to invest in gold should keep a close eye on these factors in order to make informed investment decisions.

If you decide to include precious metals in your portfolio, make sure to work with a reputable precious metals dealer. For example, when they want to buy gold bars, Scottsdale investors know they can rely on the professionalism and expertise of the team from First National Bullion and Coin. We can answer all your questions and help you find all the information you need on how precious metals can figure into your investment decisions. Give one of our experienced dealers a call today at (480) 546-5089.

The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.