What happens to gold during a financial crisis?

During a financial crisis, demand for gold usually increases because investors look for an asset that is not dependent on banks, companies, or governments. Yet gold does not automatically rise as soon as things go wrong. In the initial panic phase the gold price sometimes falls instead, because investors sell gold to obtain cash. Only after that does the safe-haven role often prevail.

How gold reacts also depends on the type of crisis, on when you bought it and on the currency in which you look. In this article you can read what "protection" by gold actually means, what gold did in earlier crises and why that differed. You will also read what happens to physical gold in a crisis: demand, delivery times and the ability to sell.

What is a financial crisis?

A financial crisis is a period in which confidence in the financial system or the economy greatly diminishes. Stock markets fall, banks get into trouble, or the value of money comes under pressure. The cause can vary widely: too much debt, a collapsing housing market, rapidly rising inflation, a pandemic, or a war. That distinction is important, because gold does not react the same way to every crisis.

Does gold protect during a financial crisis?

Gold can, during a financial crisis, contribute to the protection of your wealth, but "protection" means something different than many people think. Gold is considered a safe haven because it is scarce, globally recognized and tradable everywhere, and because physical gold that you own yourself is nobody's liability. It cannot go bankrupt and cannot be printed.

The European Central Bank describes that gold has functioned as a safe haven in various periods of financial stress. However, that does not mean that gold rises in every stock market decline.

It helps to distinguish four forms of protection:

So someone who wants to avoid temporary price losses asks a different question than someone who wants to hold part of their wealth in a tangible asset. For the first goal, gold is less suitable than is often claimed, and for the second it is exactly what many people buy it for.

Why does gold sometimes fall at the start of a crisis?

At the start of a crisis gold sometimes falls because investors often need cash. When stocks drop sharply, investors who bought with borrowed money must post extra collateral. That is called a margin call. To free up cash quickly they sell what is easily marketable and has held its value. Gold is often among those assets. The World Gold Council pointed to this mechanism as a likely explanation for gold’s decline in March 2020.

This creates a two‑phase pattern. First the acute panic phase, in which gold can fall along with forced selling. Then the phase in which central banks intervene, interest rates often fall and confidence in the financial system weakens. In that phase the safe‑haven role usually gains ground. Interest rates and the dollar also matter: a rising real interest rate or a strong dollar can temporarily restrain gold.

This pattern was also visible in spring 2026. When tensions in the Middle East rose, gold was both sought as a safe asset and sold by investors who had to raise cash because of margin calls. You can read more about that in our news article on the fluctuating gold price due to geopolitical tensions and oil fears.

A positive year can hide a severe crisis

An annual figure says little about what gold did during the panic months. Gold closed 2008 about 4% higher in dollars, while the price fell roughly 30% intrayear. In 2020 gold finished the year around 25% higher after a sharp drop in March.

Someone who bought at an interim peak and was forced to sell during the decline could therefore have incurred losses, even though the annual number looks positive. The purchase timing and the period you examine determine what the figures show. That is why “gold rose during the crisis” is too simplistic without clarification.

How did gold react by type of crisis?

Gold’s behavior differed by crisis, depending on the cause, interest‑rate policy and currency. The table below provides an overview. These are historical examples, not a prediction of how gold will behave in the next crisis.

Two examples deserve further explanation. During the Great Depression the gold price in the United States was legally fixed. In 1933 the US restricted private gold ownership and in January 1934 set a new, higher official price. That was an official revaluation within a different monetary system, not a free‑market price from which private investors could benefit. Therefore that rise is not directly comparable to today. In Great Britain, which had already left the gold standard in 1931, gold measured in pounds rose earlier.

The 1970s oil crisis was also strongly felt in the Netherlands. In 1973 and 1974 car‑free Sundays were introduced to save fuel. The combination of expensive oil, high inflation and the end of the dollar‑gold link in 1971 produced one of the strongest gold‑price increases ever.

Multiple influences

Keep in mind for every type of crisis that there are forces that support gold and forces that work against it. High inflation can increase demand for gold, but if central banks raise rates sharply that can restrain gold. A banking crisis increases the need for assets without a counterparty, but often comes with forced selling.

Read more about that interaction in our article on the influence of interest rates, inflation and geopolitics on the gold price.

What does this mean in euros?

For a Dutch investor what matters most is how gold performs in euros, and that can sometimes differ from the dollar rate during crises. The international gold price is usually quoted in dollars. In turbulent times the dollar often strengthens, because investors worldwide flee to the US currency.

A stronger dollar pushes the gold price down in dollars, but makes gold more expensive when measured in euros. As a result, a drop in dollars sometimes hit a Dutch investor less hard, and a flat dollar rate translated positively into euros, as in 2022. Therefore always compare historical returns in the same currency and over the same period.

Read more about this currency effect in our article on gold and silver as protection against currency risk.

What happens to physical gold in a crisis?

In a crisis not only the price changes, but also the market for physical gold itself. We notice that directly as a dealer: in demand, in delivery times and in people's willingness to sell.

More demand, longer delivery times

When many people want to buy physical gold at the same time, demand can temporarily exceed what producers can supply. That leads to longer delivery times, especially for popular coins and smaller bars. In March 2020 this became particularly visible, when several large Swiss refineries temporarily halted production.

That shortage can also affect the premium, the difference between the product price and the value of the gold itself. As a result a falling market price does not pass through one-to-one to the price of a specific coin or bar, and the premium can even rise while the gold price falls. How that works you can read in our article about why physical gold is more expensive than the spot price.

What we see in practice

Over the years we see a recurring pattern in our customers' behaviour. When the economy is doing poorly and stocks fall, more people buy physical gold from The Silver Mountain. At the same time fewer people want to sell, so sister company Inkoop Edelmetaal buys in less. If the gold price then rises sharply, that picture reverses and more people want to sell their gold again.

This pattern mainly says something about how people deal with uncertainty. It is not a prediction of the gold price, nor advice to buy or sell at a particular moment.

Can you sell in a crisis?

Yes, even in turbulent times you can sell your gold. Under the purchasing terms Inkoop Edelmetaal always buys in, regardless of how the price moves. Payment is made by bank transfer only, within 1 working day after inspection. If you store your gold with Edelmetaal Beheer Nederland, you sell directly from your storage account. More information can be found at Inkoop Edelmetaal.

If you want to know what your gold ultimately yielded you, don't compare only the gold price at purchase and sale. Look at the total amount you paid at purchase, any storage and insurance costs, and the proceeds you actually receive on sale.

Physical gold, exchange products and gold mining shares in a crisis

Not every form of gold behaves the same in a crisis, because each represents something different you own.

• Physical gold consists of gold bars or gold coins that are your property. Physical gold in your own possession, or allocated and held in your name, is not a claim against a counterparty.
• An exchange product on gold, such as a gold ETF or ETC, is a security whose value is linked to gold. Depending on the structure it is physically backed or derivative-based, and you have a claim on the issuer. You can read more about this in our explanation of gold ETFs.
• Gold mining shares are shares in a company that extracts gold. They move with the gold price, but also with the stock market, production costs and the company's debts, and can therefore fall sharply in a market crash.

These forms are often confused with one another, while they can turn out very differently in a crisis.

Gold versus other assets in a crisis

Every type of asset carries a different risk in a crisis, and gold is no exception. Stocks can fall sharply, especially in the panic phase. Bonds depend on the issuer's creditworthiness and on interest rates. Savings in the Netherlands are protected up to €100,000 per person per bank by the deposit guarantee scheme, but can lose purchasing power in high inflation.

Buying physical gold means that you own it. It has no counterparty risk and is independent of company profits, but it pays no interest or dividends and can also temporarily fall in a crisis. So it complements other assets, but does not replace them.

And silver?

Silver behaves more volatilely in a crisis than gold, because a large part of demand comes from industry. In a crisis opposing forces can therefore act at the same time. For example, in the first half of 2020 investment demand for silver increased, while industrial demand fell sharply in March and April.

In the acute phase of 2008 and March 2020 silver fell harder than gold, and often recovered more strongly afterwards. Those who hold silver should therefore expect greater fluctuations. You can find the current supply on our page buy silver.

What gold does not do in a crisis

Gold does not offer any guarantees in a crisis. The price can temporarily fall, especially in the initial panic phase, and no one can predict in advance how the next crisis will unfold. Gold also does not yield interest or dividends, so returns depend entirely on price movements.

It is also not a replacement for a financial buffer or for ordinary money. For unexpected expenses, readily available savings are more practical, and paying directly with gold is rarely possible in practice: those who want to use gold usually sell it first for cash. Gold works best as a deliberately chosen part of a diversified portfolio, for the long term.

If you are considering a first purchase because of the uncertainty, our checklist to recognize a reliable gold dealer can help you get started.

Buying physical gold from The Silver Mountain

If you want to hold physical gold as a tangible part of your assets, you can buy it from us with confidence. We have specialised in physical precious metals since 2008 and are listed in the AFM register with licence number 12048860 for offering investment objects. Our prices automatically follow the market, and you can see the premium for each product.

You can choose from gold bars from refineries on the LBMA Good Delivery List and gold coins from recognised mints. Your order is delivered insured via our own delivery service, or is available by appointment in Baarn or The Hague. If you want to have your gold stored, this can be done allocated and in your name via Edelmetaal Beheer Nederland. And if you want to sell later, Inkoop Edelmetaal offers you the certainty to sell your gold back to us.

Unsure which product suits you? Fill in our selection guide or call us, we are happy to advise.

Conclusion: gold in a crisis is relative, not absolute

During a financial crisis gold is often sought as a safe haven because it is scarce, tradable everywhere and as physical possession carries no counterparty risk. Yet this rarely follows a straight line. In the initial panic phase gold sometimes falls along with the market because investors need liquidity. Afterwards the safe-haven role usually gains ground. And a positive annual result can, as in 2008 and 2020, hide significant interim declines.

How gold reacts exactly depends on the type of crisis, your timing of purchase and the currency you look in. For physical gold a crisis often means more demand, longer delivery times and sometimes higher premiums. Gold does not offer a guarantee, but can be a tangible part of a diversified portfolio for the long term.