November 7, 2023
Geopolitical Impact On Financial Markets
Financial markets have become increasingly global over the past several decades. While there have been some obvious benefits to the trend – like market growth, foreign exchange relationships, cooperative product development – there are some not-so-obvious drawbacks to be aware of, and their potential impact on investments.
Now we’re focused on interest rates and the possibility of an economic recession. We’re also witnessing three of the biggest threats to democracy: China, Russia, and Iran, flexing their muscles in all corners of the globe. Though not new, this visibility has been heightened given the global impact of their most recent threats and actions.
Taiwan has been in the sights of China ever since they broke off from Japanese control after World War II in 1945. Taiwan is one of the world's most important sources of technological components. China also refused to recognize Taiwan since the Chinese civil war resulted in the PRC (People’s Republic of China) the Chinese communist country, and the ROC (Republic of China) which is known as Taiwan. This conflict remains in the forefront today.
Russia has invaded and decimated Ukraine, which supplies huge amounts of grain and feedstock to parts of Europe. Ukraine gained its independence after the collapse of the USSR, and current political leaders in Russia seem bent on recapturing all the territory lost during that collapse.
Iran supports terrorist organizations such as Hamas, that have Israel and the entire Middle East on edge. Much of the current conflict in Israel can be attributed to the weapons and military support provided by Iran. Of course, the entire global reliance on fossil fuel largely provided by Middle Eastern oil is challenged by Iran’s actions.
Any or all these situations could impact the global financial markets, and our investments. Just recently, precious metals markets have been awakened with gold climbing over $100 per ounce and silver advancing more than $1 per ounce. The precious metals markets have long been both an indicator of expected unrest or inflationary expectations.
While we may not be able to do anything about these circumstances, it is worthwhile understanding their potential impact on our financial investment decisions. If you need financial support during this time, you’re not alone! Subscribe to the Life. Money. You.® Financial Well-Being Program (visit LifeMoneyYou.com) to get your own financial coach and prescriptive money tools to help you make better money moves on the go.