Gold has been referred to as the crisis commodity because it tends to appreciate in value in response to negative economic, monetary, or political conditions. Throughout history, tensions and crises around the world have disrupted international commerce, distorted economic conditions, and threatened vital U.S. interests. Today, however, few investors realize that world tensions still pose a serious threat to the financial markets. Despite the fact that the United States is the world's only remaining superpower, there are a myriad of problems festering around the world, any one of which could erupt with little or no warning. During these periods of international crisis, gold is the best form of financial insurance to protect a portfolio.
Gold tends to outperform other investments during periods of world tensions.
The very same factors that cause other investments to suffer cause the price of gold to rise. This conflict, known as the Yom Kippur War, was over by 24 October, but it changed the gold market forever. Today there are enough reasons for investors to be concerned about the potential effects of world events on their investment portfolios and gold is uniquely suited to provide a safe haven in the event of such a crisis. The first thing investors need to do is realize how the impact of the Middle East crisis and the looming energy crisis will affect them individually. The pass-through effect of higher fuel prices will take 10 to 14 months to reach the consumer level.