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Why geopolitical change is a strong buying signal for gold.

Gold in times of geopolitical change.

If you just glance at the headlines, the world seems much as it was last year and the year before.

A few wars, some trade disputes, ups and downs in the economies of various countries. Same old same old.

But if you look a little closer, you’ll see the first cracks appearing in what will prove to be a seismic change in the geopolitical landscape.

In the Middle East, the rise of the ISIS terrorist group and its incursion in both Syria and Iraq threaten the stability of the region in ways that are almost beyond imagining.

Iran is getting involved. Russia is promising support to the current Iraqi regime. Israel is staying fairly quietly on the sidelines…but not for long. And America is being strangely passive.

In other words, the stage is set for a complete rewrite of the map of the Middle East. And remember, Iraq is the second largest oil producer in the region.

Meanwhile, Putin is not just dipping his fingers into Middle East politics, but is also in the midst of his own incursion into Ukraine, signaling a new wave of Russian expansionism. He is making a lot of countries in Eastern Europe very nervous indeed.

Putin is looking east as well, penning a multi-billion dollar energy contract with China.

And, of course, China is rising fast to become the world’s largest economy, with its own expansionist plans in the East China Sea.

Add this all together and you see some massive shifts in play. And as I said, while other players are busy on the world’s game board, America appears to be asleep at the wheel.

What does all this mean for gold?

This scale of geopolitical upheaval is a signal for massive market uncertainty. We are moving into unknown territory, and that makes markets restive.

Typically, when this happens, more money moves into gold as a safe, liquid and portable store of wealth. Countries buy more gold, as do high-wealth individuals. And, of course, regular investors like you and me can do the same, albeit on a smaller scale.

The impact of this massive geopolitical shift around the world has not yet been factored into the price of gold. All we are seeing are small rises and falls in the spot price.

But my best guess is that world events will soon trigger a very large rise in gold prices, as more and more buyers chase a very limited supply of bullion.

In other words, buy now.

About the author: DH Kenrick is a student of world economics and a committed gold enthusiast. 

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