Gold in Times of Crisis – Lessons from 2008 & COVID-19
In this edition, we explore how gold behaved during two of the biggest global crises in recent history: The 2008 Global Financial Crisis The COVID-19 pandemic And more importantly, what investors can learn from it.
When markets panic, where does the smart money go?
The answer, often, is gold.
2008 Global Financial Crisis: The Gold Surge That Followed
🔹 Backdrop:
The housing market collapsed, Lehman Brothers fell, and global stock markets lost trillions.
This was a black swan moment that shook the world economy.
🔹 Gold's Reaction:
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Initially, gold fell from ~$1,000 in March 2008 to ~$720 in October 2008.
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Why? Investors were liquidating everything—including gold—to cover losses and raise cash.
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But soon after, gold began a historic rally.
🔹 The Recovery:
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From late 2008 to 2011, gold surged from ~$720 to $1,900/oz—its then all-time high.
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Driven by:
✅ Loose monetary policy
✅ Near-zero interest rates
✅ Quantitative easing (QE)
✅ Fear of currency debasement
🔹 Lesson:
Gold may dip initially during a crisis, but it often shines in the aftermath, especially if central banks print money.
😷 COVID-19: Gold's Modern Safe Haven Moment
🔹 Backdrop:
In March 2020, COVID triggered a global lockdown. Markets crashed. Fear was everywhere.
🔹 Gold's Reaction:
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March 2020: Gold fell briefly from ~$1,680 to ~$1,450/oz.
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Again, panic-selling and cash demand caused a short-term dip.
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But by August 2020, gold hit a new all-time high of ~$2,075/oz.
🔹 Drivers:
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Massive global stimulus packages
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Fed’s interest rate cut to zero
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Global bond yields turned negative
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Fear of inflation, debt, and currency weakening
🔹 Lesson:
In a health + economic crisis, gold reaffirmed its role as a crisis hedge.
📊 Crisis Playbook: What Should Investors Watch?
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Initial Dip ≠ Weakness
Early liquidation is common. View it as a buying opportunity.
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Monetary Policy Response Matters
Gold tends to rally when central banks cut rates or print money.
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Watch Real Interest Rates
When inflation is high and real rates are low/negative → gold thrives.
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Gold Is a Long-Term Insurance
It’s not about timing tops/bottoms—it’s about holding conviction.
🧠 Final Thought
Gold doesn't always react instantly.
But in times of crisis, currency uncertainty, and systemic fear, it’s one of the few assets that holds its value.
“Gold is money. Everything else is credit.” – J.P. Morgan