Gold has shot up 5%, and silver even more, during the past few days as geopolitical uncertainties rule.
FUNCHAL (MINEWEB) – While the ever increasing violence in the Ukraine after an initial couple of weeks seemed to have had a reducing impact on safe haven demand for gold – perhaps through news overkill in the early days of the supposedly Russian-inspired revolt against the Ukrainian government – the yellow metal has received something of a boost on the rapid – and seemingly totally unpredicted – incursion of the Islamist fundamental ISIS insurgents into Iraq.
However while gold moved upwards, the initial move was relatively minor until President Obama announced that he would be sending in some 300 U.S. ‘military advisers’ to help support the beleaguered Iraqi government and was also looking at other options. Gold then shot up around $40 before settling back a little, but still remaining well above the key $1300 level and is currently carrying a decidedly more positive image than it was only a couple of short weeks ago.
Indeed the Iraq situation, which could ultimately end by effectively splitting the nation into three religious-dominated entities – into Shia, Sunni and Kurd states – is seemingly out of control and, could even end in Shia Iran working in conjunction with ‘The Great Satan’ of the U.S. in helping bring the situation back into some semblance of structured order satisfactory to both parties – a co-operation unthinkable just a few weeks ago.
Indeed it is perhaps ironic that the old proverb ‘The enemy of my enemy is my friend’ is reputed to be derived from an old Arab saying suggesting the region has been through this kind of expedient partnership before. Taking this a step further, Syria’s Assad regime – the current pariah in Western/Arabic relations – also has a strong interest in bringing down ISIS which appears to have the objective of setting up a fundamentalist Sunni dominated state taking in large hunks of Syria and Iraq. Will the U.S. consider working with the Syrian regime too to cut out what it sees as the greater threat? Perhaps that is a step too far.
As a recent release from analysts employed by mega coin and bullion dealer Blanchard & Co of New Orleans points out, although the northern Summer months are seen as traditionally a slow period for gold, the significant geopolitical tensions in Iraq and the Ukraine have begun pushing precious metal prices significantly higher.
“There are a lot of reasons investors should own gold, and the current terrorist crisis in Iraq, as well as the breakdown in talks between Russia and the Ukraine, illustrate the metal’s qualities as insurance when governments clash,” says Donald W. Doyle, Blanchard’s chairman and CEO. “I doubt many people predicted the U.S. would partner with Iran to try to manage a situation in Iraq that has spiralled out of control.”
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