Commentary: What previous pandemics tell us about gold

Travellers at Beijing Capital International Airport in January 2020. Credit: iFotos/iStock.

In early January 2020, gold prices were steadily escalating on the heels of strong investor confidence fueled by some of the largest mining M&A transactions in recent history, including Newmont’s merger with Goldcorp (US$10 billion), and Kirkland Lake Gold’s acquisition of Detour Gold (US$3.8 billion).

Over the past 12 months, gold prices had risen from US$1299 per oz. in January 2019 to US$1476 in December 2019. Meanwhile, in and around that time, the now infamous COVID-19 virus was also gaining momentum, sweeping across Wuhan, the capital city of China’s Hubei province. At first, markets around the world were indifferent to the initial outbreak, as equity markets and commodities, including gold (US$1,560 per oz. as of January 2020), continued to rally to their highest levels in years.

Then, on March 11, the World Health Organization (WHO) officially classified the outbreak of the disease as a pandemic and chaos ensued. The concern about COVID-19 has wreaked havoc on markets around the world, laying the groundwork for what will most likely become the next recession. With the arrival of spring, investors have seen their savings diminish along with the melting snow. While some sell-shocked investors have turned to cash amidst the uncertainty, others have looked to gold as the cure to their ailing portfolios. Gold closed at US$1,471 per oz. on March 19.

One question to ask is how did gold withstand previous public health emergencies?

In the history of pandemics, one pattern emerges: There is no clear evidence that they have had any long-lasting impact on gold. Whether or not gold will stay immune in the current crisis remains to be seen. In a March 19 press release, the World Gold Council acknowledged that gold’s volatility will remain high but it is ultimately bullish that the metal will continue to serve as a safe haven in the foreseeable future.

Should the rate of spread of COVID-19 continue in its current trajectory, however, the potential for material impacts to the gold mining sector can’t be ignored. Already, mining companies like Agnico Eagle, Endeavour Mining and Newmont are reducing production or delaying development of key assets. These measures and the ever-evolving geopolitical landscape of the regions in which these companies operate will almost certainly impact supply and demand for the metal. As the COVID-19 story continues to be written, only time will tell how gold will endure in this next chapter.

The Bubonic Plague wiped out nearly half of Europe’s population. Estimates of the death toll from the 2018 Spanish Flu of 1918 range anywhere from 20 to 100 million, and the more recent Zika virus pandemic of 2015 affected 76 countries around the world. Within the last 40 years alone, the world has witnessed seven events that have had long-lasting effects across the financial, socio- and geopolitical spectrum (HIV/AIDs; SARS; Swine flu; Middle East Respiratory Syndrome [MERS]; Ebola; and Zika).


It’s widely believed that the origin of the HIV/AIDS virus can be traced as far back as the 1920s (according to the National Center for Biotechnology Information), but the disease wasn’t formally recognized until 1981. Unlike respiratory transmitted illnesses like COVID-19, AIDS was much slower to propagate and only reached its peak by 2000. (In that year alone it killed 1.4 million people.) By that point, gold was already in a precipitous three-year decline due in part to a strengthening U.S. dollar. Gold fell from a peak of US$400 per oz. in January 1996 to US$287 per oz. in January 1999, before finally levelling off below US$300 per oz. – its lowest level in two decades.


By every measure, the global effects of the SARS outbreak of 2002-2003 are dwarfed by AIDS. By the time the SARS pandemic ended in July 2003, seven months after it began, the number of reported infections totalled 8,096 cases resulting in 774 deaths. In the months leading up to the outbreak, gold was on a slow but steady climb fuelled by investor optimism and strong fundamentals. Over the course of the relatively short-lived pandemic, the amplitude of price retreats and surges briefly increased, but by the time the dust settled, gold ended up 10% higher than before the story broke. At the outset of SARS, in November 2002, gold was US$319 per oz. In July 2003, it was US$351 per oz.

Swine Flu

The U.S. reported the first case of the 2009 Swine Flu in April 2009 (according to stats cited by the University of Oxford), and within two months the WHO had declared it a pandemic. By August 2010, upwards of 575,000 deaths were attributed to the virus around the globe, according to stats from the WHO. In that 20-month span, gold soared from an average of US$860 per oz. at the start of the outbreak, to US$1,215 per oz. by the time the pandemic had ended. It continued its rally for several months more before peaking at US$1,656 per oz. in January 2012.

— Kurt Breede is a mining consultant and principal of Metallica Consulting, which specializes in mineral resource estimation and technical disclosure. The views in this commentary are the author’s alone.



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