Gold Prices

In the last decade, the incredible rise in gold prices has stunned many investors. Some people point back to a similar rise in the price of gold and explain it as part of a cycle which will eventually return prices to a much lower level. This happened in the early eighties, when gold rose to more than $600 per ounce before losing half its value in just a matter of months.

Tension in the Middle East is one factor that is often overlooked when people try to explain the soaring price of gold. Fear is a driving factor behind many people’s decision to invest in tangible assets such as gold. Most people rightly think of Middle East tension as something that drives up oil prices. However, there are several possible outcomes of this tension which cause people to think that gold is an excellent place to preserve their wealth.

There is evidence of correlation, if not causation, in the way Middle Eastern tensions have mirrored gold prices. Gold began a steep climb at the beginning of the 21st century. Right at this time, the September 11th attacks occurred and the United States began an intervention in various Middle Eastern countries, such as Afghanistan, Iraq and Pakistan.

These trends appear very likely to continue. While western nations have scaled back activities in Iraq, they have simultaneously increased tension-causing actions in other nations. Even countries in which the allied nations have cancelled military presence continue to see drone attacks and diplomatic threats.
In the 1970’s, gold prices began to rise during a period in which inflation was rampant and the oil supply from the Middle East was threatened. Tensions in the Middle East always seem to have an effect on gold prices. Investors are wise to keep an eye on the events taking place in the Middle East when trading gold.

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