The sanctions standoff between the West and Russia does not subside. The trade war between the United States and China is not over yet. The authorities are strenuously looking for ways to strengthen financial security.
The essence of economic sanctions
Serious disagreements between countries can’t always be resolved diplomatically. In such cases, economic measures are implemented: mostly import and export bans, as well as restrictions on various financial transactions. For example, now it is forbidden to export oil, weapons, aviation fuel and luxury goods from the European Union to North Korea.
Sanctions implemented to the detriment of the country's interests force it to change its political course and make compromises.
Let’s review specific examples that illustrate the damage caused by the economic sanctions.
Since 2014, the damage from the sanctions imposed by the West amounted to $52-55 billion. Bloomberg analysts believe that the Russian economy couldn’t grow by an additional 6% due to the imposed sanctions. The flow of foreign money into the country dropped significantly, many companies lost access to the western market, and the Russian ruble exchange rate experienced a dramatic fall.
According to the UN, the total losses from the sanctions war with Russia amounted to more than $100 billion. Germany suffered the most, accounting for about 40% of all the EU losses. The major damage was caused to the export of agricultural products and the banking sector.
The US-enforced oil embargo* on Iran caused irreparable damage to the country, estimated at $160-180 billion. Later, the sanctions were lifted, and the country's economy slowly began to recover, but a mere threat of the imposition of new sanctions was enough to bring down the local currency, provoking a new crisis.
Countries consider gold the only salvation
In 2018, according to statistics of the World Gold Council (WGC), the central banks of many countries actively purchased gold. Given the heavy economic pressure, Russia bought record amounts of gold. Turkey also decided to enhance its stability against the background of deteriorating relations with the United States. Grim prospects of the trade war continuation forced China to replenish its gold reserves by the end of the year. Experienced politicians understand that only gold can protect a state, strengthening its position on the international arena.
On the chart: over the past six months, gold has demonstrated a steady growth, the price of gold increased by 9%.
On Monday, March 4, the price of an ounce of gold is $1,294.
Gold serves as the safe asset that strengthens Financial Security.
*Embargo — a trading ban on the import or export of certain goods or foreign money from the country, a restriction or a complete termination of trade relations with the country.