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BookmarkA war, a state or period of armed hostility, is not only detrimental to the citizens, but the overall function of a nation. War is expensive, uncertain, and stressful. There is no doubt that when a country in facing the war time the citizens become fearful of the future. Will they lose relatives to battle? Will the country be defeated? What will happen to their home?
Many say history has a way of repeating itself. When referring to wars, taking a look at historical trends give a frightening insight on what happens to an economy during war times. After World War II, some economists believed wars were good for an economy. According to Nobel-winning economist Joseph Stiglitz, ““It used to be thought that wars are good for the economy. No economist really believes that anymore.” In order for governments to pay for a war and all that a war encompasses, they usually impose taxes, which inflate the currency. If a country loses a war, like Germany did in WWII, the currency becomes virtually worthless. The country defaults to printing so much paper currency in order to pay off war expenses, that the value of that money is decreased tremendously. So much so, that in Germany the citizens burned their money because there was no value. During the Revolutionary War, “the paper continentals were utterly rejected by the populace, who strongly preferred gold and silver.”
Since the American Revolution, commodity prices have soared during all major wars involving the United States. This would include the precious metals. War time is said to be the best time to buy into precious metals. Reason being, during the time of the Gold Standard, paper was always backed by metal. There was security in the amount of “money” that was in ones bank account. Our country, no longer on the Gold Standard, has no back up of currency.
In our recent history, the war with Iraq and the terrorist fears created a huge spike in commodities. People were so fearful of what was to come in the next few years that they needed security. Gold and silver became that security blanket that kept the citizens warm at night, while the soldiers battled in war.
Unfortunately, another war is on the forefront. Iran has made it known that they are compiling nuclear weapons that will be able to reach the United States. These intercontinental missiles pose a huge threat for the possibility of a nuclear war. According to U.S. Defense Department, Iran may be able to build a U.S.-range missile by 2015. This information is not only threatening, but extremely frightening for the world and the economy. Israeli intelligence services are keeping a close eye on Iran because their nuclear advancement directly affects their country. As stated in recent articles, Israel is said to be the assassins of a few Iranian nuclear scientists. The United States and the European Union have already acted to defend against this possible outbreak of war, attempting to cut Iran out of international financial system. The United States has also imposed sanctions on companies that would benefit the nuclear production in Iran, including their oil and petroleum productions. President Obama is planning to meet with Israeli allies because as he stated, “Iran can’t be allowed to obtain a nuclear weapon and the U.S. will do what’s necessary.” Iran is aware of the allies coming together to defend against their weapons and has reacted by stopping oil exports to Britain and France. Technically, Britain and France have little reliance on Iranian oil, but it was a symbolic sign from Iran. There is speculation that Iran may halt all exports of their oil to the entire European Union.
As facts show, the possible war with Iran would create an incredible need for “money” in order to keep up with a potential nuclear war and the technological advances that would need to be made. Extreme printing of money will only lead to its eventually demise, which poses a great picture for commodities and precious metals. All currencies, due to the Greek bailout, are on edge. No nation is stable, no currency is steady. Iranian oil has already made a price increase, which is the first sign of a war. Oil commodities increasing is a sure tell sign that things are heating up. With oil rising, precious metals are sure to follow. This is only the beginning though. As currency continues to inflate, gold and silver prices will soar. For those who know anything about history, a war would send them running for precious metals. If a country were to take a turn for the worst during a war, the precious metals will be the only asset that will be of any worth. People will seek the same security they needed during the war with Iraq, which means gold and silver will yet again be keeping the country warm again during times of cold, catastrophic war.
