Pandemics And Gold

Although present in popular culture, the outbreak of COVID-19 has brutally reminded people of the risk of a pandemic. Some people panic unnecessarily, but their fear is understandable - after all, epidemics and pandemics (which are global epidemics) have accompanied humanity since the dawn of time, taking a serious toll. For example, the best known and the most devastating pandemic in human history was the medieval Black Death that killed 75-200 million people, reducing the Europe's population by 30 to 60 percent.

But are the fears about the new coronavirus justified? Must gold prices rally? Let's investigate the history of pandemics and draw conclusions for the current case, focusing - obviously - on the gold market. Investors should never panic but look to history as a guide. Although very interesting, we omit all the pandemics before the 1971, when the gold standard was abandoned and the yellow metal started to be traded freely. We also do not analyze numerous influenza epidemics, as they occur generally each year during the winter and impact primarily the elderly (majority of influenza-associated deaths are in persons over 64 years, whose immunity is weakened). We will analyze the pandemics visible in the table below, in this part focusing on the first two.

Table 1: History of global pandemics (source: own elaboration based on data from the World Health Organization and https://www.ncbi.nlm.nih.gov/books/NBK525302/)

 

So, we start our overview with the HIV/AIDS pandemic, which originated in Africa in the 1920s. However, AIDS was not recognized until 1981, while HIV was not discovered and related to AIDS until 1983. In the 1980s and early 1990s, the outbreak of HIV/AIDS swept across the United States and rest of the world. Although the number of new infections peaked in 1999-2000 at 3.16 million people infected that year, it has not still been eliminated. Actually, it is one of the world's most fatal infectious diseases, particularly across Sub-Saharan Africa. As of 2017, almost 36 million people are infected with HIV globally, and almost one million (954,000) people died from HIV/AIDS in that year.

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