#29leaks gold bars
(Image: Wikimedia commons/Stevebidmead)

When Russian President Vladimir Putin ordered a military invasion of Ukraine on Thursday, gold prices surged to the highest level in more than a year. Meanwhile, Bitcoin, Ethereum and other cryptocurrencies dropped. 

This is because gold is what those who talk about this stuff refer to as a “safe haven”, whereas Bitcoin and other alt-currencies — despite some investors promoting them as such — are not. 

What does that mean? A “safe haven” is a type of investment that is expected to remain steady or increase in value when shit, globally, hits the fan. Gold and other metals are traditional “safe havens”, as are certain currencies, namely the US dollar (USD), the Japanese yen (JPY) and the Swiss franc (CHF).

Why are they so safe? Basically, when panic hits — such as when, say, Russia invades Ukraine — the markets become volatile and investors dump their risk-sensitive investments and move to a place of “shelter” (investors really get into the spirit of the chaos with their choice of words). Because everyone else is also seeking refuge, they turn to the same risk-off resources and the increased demand sends the value of the safe haven soaring.

So go all in on gold? Not so fast — since the original surge (in bullion) and drop (in Bitcoin and other cryptocurrencies) both of these investments have actually done a bit of a reverse. Why? Because US sanctions against Russia were weaker than investors expected, and they are hurting Russia less than they should — thanks in part to Russia’s enthusiastic embrace of crypto, which allows it to evade a lot of these sanctions.

War really does look different in 2022.