WAR IS EXPSENSIVE -

 

The old saw is that gold is a safe haven asset.

Maybe. 

But event driven investing is short term.

Long term, Gold rises as paper currencies are debased.  This is just common sense.

And nothing debases the currency like War.  

If you look at the current war, missile drones cost about $20,000 to $50,000.  Russia and China can supply Iran with unlimited  missile drones.  The cost of the defense systems agains these drones - like the Patriot missile system costs a billion dollars for a the battery and an addtional 4 million dollars per missile.  If the US wants to continue to arm its Middle East allies against the Iranian barage, the cost will be astronomical.

That doesn't take into account the cost of mainting war ships in the gulf and sending our own fighter jets across the world to drop bombs.  Then there's expanding the military and getting troops across the world.  Maintaining supply lines...

Then there's the disruption of supply chains and the increase in commodity prices, especially oil price - even though, over long periods of time, energy is abundant.  It doesn't matter, because when there are big discruptions in supply chains the transporting of energy can become prohibitively expensive.

Then there's the loss of trust between nations.  This too is inevitable, and this has an adverse effect on the cost of doing business.  Treaties get broken.  Trade alliances are ruptured.

It's all very expensive. 

And where does the money to pay for it all come from?

We print it.  Plain and simple.  We print it.

That means everyone pays for it by having our currency debased.

It also means we have to issue more and more debt.  But as our society because increasingly belicose, we find there to be decreasing interest in other countries in buying our debt to subsidize our wars.  So we have to buy all of our own debt.  This debases the currency even more.

In fact, at some point this leads to hyperinflation.  If we're very lucky perhaps we can control that for some time by opting for a torpid stagflation.  That's really best case scenario, and we're not far off from it right now.

None of this is very controversial or original, but somehow it gets lost in the race to justify all the dealth and destruction.

If you can't see how that, over time, must incresase the value of Gold, well, then maybe you're better off buying something else.