All gold and calm on the Eastern Front | Cryptocurrency News

The war in Ukraine has entered its seventh month and some believe that China Preparing for war with Taiwan. Will the bulls attack the gold market?

In August, half a year had passed since the start of the war in Eastern Europe. Ukraine defended its independence but lost 13% of its territory. The six-month war between Europe’s two largest nations has led to widespread death and suffering.

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More than 13 million people have been displaced, and about 7 million refugees have been scattered across Europe. Ukraine’s economy collapsed while food and energy prices soared.

What is the situation on the front? Unfortunately, the invading army maintains relatively stable land relations with Crimea and gradually pushing the Ukrainian army from their positions in the Donbass, the main area of ​​the war,

This means that taking control of the rest of Donetsk Oblast by the Russians is probably a matter of time, although this could take several months. A change in favor of the Ukrainians is possible only if the West significantly increases its military supplies, thereby creating an effective Ukrainian counter-aggressive.

It is true that the Ukrainian counter-offensive in the south of the country towards Kherson is gaining momentum – especially thanks to the supply of HIMARS – but a full-scale operation is unlikely due to the lack of manpower and weapons.

However this happened, Russia would then have to decide whether to abandon and withdraw its troops or to declare a universal draft and full mobilization, throwing all its potential into battle. This will take the war to a whole new level, which can boost gold pricesAt least temporarily.

What are the possible scenarios for the end of the war?

Well, given that Russia’s military capability is slowly dwindling and the country needs an operational pause to build up its army, it would like to sit at the negotiating table with the aim of taking control of the Donbass.

However, Ukrainians are not ready to make any territorial concessions. Thus, Russia will likely continue to bomb Ukrainian cities and blackmail the whole world with a nuclear power plant in Zaporizhia, trying to force Ukraine to negotiate and accept some territorial losses.

What are the implications for gold?

Well, war shows that gold bull should not rely on geopolitical events, Although gold initially gained momentum during the first phase of the struggle, the effect was short-lived, as the chart below shows.

At this point, when the situation has stabilized somewhat, and the war of abandonment may last several months – if not years, as some experts believe – the conflict significantly affected gold. Not likely to happen. This could of course change, if conflict escalates, for example, in the nuclear sector.

or in the Far East. You see, the war is taking its toll outside Eastern Europe as well. For Beijing, the balance of power with the US is shifting in its favor, as Uncle Sam’s focus is on Ukraine. If you look at the direction in which China going now, You can clearly see its preparation for conflict outside your country,

This is a stark departure from the well-known theory that China defends itself only in its territory. Beijing’s angry response to Nancy Pelosi’s visit to Taiwan, including the unprecedented exercise, is saying a lot.

Is there a possibility of an invasion of Taiwan? Well, “complete reunification of the homeland” is an official policy of China. What has changed recently is simply the fact that China has built and modernized an impressive army, reaching the point where he can actually achieve his goal,

Given China’s economic slowdown, President Xi Jinping’s aspirations and the ongoing war in Ukraine, this time will be very good for China.

Such a military conflict could be even more effective than the war in Ukraine, This is not only because Taiwan is a great semiconductor producer and an integral part of the Western tech industry, but also because, on the contrary, UkraineThe US government has not ruled out direct intervention to defend Taiwan.

Indeed, there are verbal agreements with Uncle Sam, Japan and Australia to intervene militarily in case China attacks. Therefore, it can trigger WW3.

Given the fact that Taiwan is an island that could be quickly blocked by China, the US and its allies would not be able to arm Taiwan through neighboring countries in the case of Ukraine.

They will either leave Taiwan or engage in a full-scale military operation. Hence, The price of gold may react more clearly to an invasion of Taiwan than to an invasion of Ukraine,

Although, Beijing is not likely To launch a full-scale invasion of Taiwan in the near future, because China has only a fraction of the ships needed to carry out an amphibious attack. In addition, potential landing sites on the west coast are blocked by nearby mountains, and the island lacks the infrastructure to support the invaders.

Instead, China could have opted for a full-scale amphibious invasion. It won’t be equally positive for gold prices, but the yellow metal could still hold some gains, at least for a while.

The bottom line is that the war in Ukraine could go on for several more months. Although, Gold bullocks should not count that gold will benefit from it. The yellow metal can only achieve more if conflict escalates to either the nuclear sector or the Far East, along with China’s attempt to invade Taiwan.

However, both of these conditions are unlikely, and even if they do, their effect on sleep should only be temporary. Fundamental factors are much more important to gold’s long-term outlook than geopolitics.

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Arkadiusz Sieron, PhD

Sunshine Profit: Effective investing through diligence and care.

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