By Alasdair Macleod
GoldMoney, Toronto
Friday, June 12, 2026
Currencies are debased during and after wars, because government spending goes through the roof not just due to defence spending but also because of the economic consequences.
Financial markets, particularly in North America and Europe, are ignoring the lessons of history. By their actions participants believe that it is the marginal cost of holding gold over prospective interest rates which determine the former's value. The assumption is that inflation is increasingly likely to surprise on the upside as a result of the closure of the Straits of Hormuz, removing the hoped-for reduction in interest rates later this year and substituting the likelihood of an increase.
... Dispatch continues below ...
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This is thoughtless nonsense that assumes that currency deposits in a bank are the ultimate safety. The delusion is primarily due to accounting investment returns in these currencies, which ignores the factors changing their purchasing power. Last week has been a prime example of this error, as the values of currencies have been driven higher against those of gold and silver.
Trading short-term is particularly hazardous. But there is a major benefit for stackers prepared to benefit from an arbitrage between current investment misconceptions about the role of gold and silver, and the reality which always undermines currency values following war. ...
... For the remainder of the analysis:
https://www.goldmoney.com/research/gold-in-time-of-war [2]
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