The True Cost of Securing Physical Gold in a Destabilizing World

In an era marked by geopolitical fragmentation and escalating conflicts, gold has reemerged as a cornerstone of economic resilience and strategic power. However, its role as a "safe-haven" asset is increasingly complicated by the logistical and financial challenges of securing physical gold in unstable regions. From the war-torn landscapes of Sudan to the sanctions-strangled economies of Venezuela, the cost of safeguarding gold-both in terms of security expenditures and operational complexity-has surged, reshaping its value proposition for investors and central banks alike.

Geopolitical Tensions and Gold's Strategic Relevance

Gold's appeal has been turbocharged by geopolitical risks, particularly in conflict zones. Between 2023 and 2025, central banks added over 1,500 tonnes of gold to their reserves, nations like China and Russia leading the charge as part of broader de-dollarization strategies. This trend reflects a growing distrust in fiat currencies, as evidenced by the 15-30% devaluation of local currencies in conflict-affected regions between 2022 and 2025, while gold prices surged. For instance, Russia's central bank expanded its gold reserves to mitigate the impact of Western sanctions, using the metal to stabilize its economy amid frozen assets.

Yet, gold's strategic value is not without vulnerabilities. The rise of gold-backed digital assets-such as stablecoins developed by Kyrgyzstan-has introduced new risks, including potential misuse for sanctions evasion. These innovations underscore gold's dual role as both a geopolitical tool and a target for exploitation in a multipolar world.

Logistical Challenges in Conflict Zones

Securing physical gold in politically unstable regions involves navigating a labyrinth of risks. In Sudan, where gold constitutes 70% of exports, the metal has become a lifeline for warring factions. Smuggled gold, often routed through Chad and the UAE, funds military operations and bypasses international sanctions. Similarly, in the Democratic Republic of the Congo, gold has fueled conflicts involving the and the Congolese government, with Rwanda and Uganda exporting record amounts of Congolese gold despite minimal domestic production.

Transportation in such regions is fraught with peril. Northern Chad's Kouri Bougoudi goldfield, for example, is a hub for illicit activities like drug trafficking and arms smuggling, making gold transport perilous. In the Sahel, terrorism and weak governance have rendered gold movement a high-stakes endeavor, with armed banditry and cross-border violence exacerbating instability.

Quantifying the Costs: Storage, Insurance, and Transportation

The financial burden of securing gold in conflict zones is substantial. Insurance costs for 1-ounce gold bars , but in high-risk areas, these premiums can increase tenfold. , , . Storage fees also vary widely: segregated storage (where gold is kept separately) , .

Transportation adds another layer of expense. Armored transport for large shipments incurs fees based on the number of bars, while energy shortages in conflict zones further disrupt logistics, indirectly affecting supply chains. For example, in Sudan, , but this revenue was offset by exorbitant costs to secure and smuggle the metal through volatile corridors.

Case Studies: Beyond the Usual Suspects

While Sudan, Chad, and Congo dominate discussions, other regions like Afghanistan, Yemen, and Venezuela present unique challenges. In Venezuela, in December 2025 as investors hedged against U.S. sanctions and currency collapse. However, specific data on storage and transportation costs in these regions remains sparse, highlighting a gap in transparency. The UAE's role as a gold hub for conflict-related exports-importing 29 tons of Sudanese gold in 2024 alone-further complicates efforts to track and regulate these flows.

Implications for Investors and Policymakers

For investors, the true cost of holding physical gold in unstable regions extends beyond market price. The cumulative burden of insurance, storage, and transportation can erode returns, particularly in environments where theft and smuggling are rampant. Central banks, meanwhile, must weigh the strategic benefits of gold accumulation against the operational risks of securing it in conflict zones.

Policymakers face an equally complex challenge. Strengthening traceability in gold supply chains-such as through blockchain-based tracking-could mitigate illicit financing, but enforcement remains inconsistent. The OECD's 2023 guidelines, for instance, have done little to curb the UAE's role in facilitating conflict-related gold trade.

Conclusion

Gold's status as a geopolitical and financial asset is undeniable, but its value is increasingly contingent on the ability to secure it in a destabilizing world. As conflicts persist and digital innovations complicate oversight, the true cost of physical gold-measured in both dollars and geopolitical risk-will remain a critical factor for investors and nations alike.