2024-05-07 10:33:44
Despite fluctuating gold prices, Germans continue to rely on the shiny precious metal. That’s how valuable gold ownership actually is.
Bars, coins, jewelry – the gold treasure of people in Germany has become a little smaller again after the Corona boom. At the beginning of the current year, 9,034 tons of the precious metal were in private ownership in this country, as researchers from the Steinbeis University Berlin determined for the travel bank. The previous survey in 2021 reached a record volume of 9,089 tonnes.
Almost six percent of the world’s gold reserves are owned by Germany
The gold holdings that private households in Germany hold for investment purposes in the form of bars and coins even increased by 35 tons to 5,229 tons compared to the 2021 analysis. The remaining 3,805 (2021: 3,894) tons are gold jewelry. Together with the Bundesbank’s 3,353 (as of December 31, 2023) tons, 5.9 (2021: 6.2) percent of the global reserves of the precious metal are in German possession.
If you were to put the entire gold holdings of private households in Germany and the Bundesbank into a cube, it would have an edge length of just over 8.6 meters. At the time of the survey, this gold treasure was worth around 750 billion euros (gold price as of January 29, 2024). The gold held by private individuals for investment purposes in the form of coins and bars accounts for an estimated 315 billion euros.
That’s why the Germans are investing in the golden precious metal
Gold is considered a timeless and crisis-proof currency – also as a hedge, for example in times of high currency devaluation due to rising prices. Those who buy gold for investment purposes actually cited protection against inflation as their primary motive in the survey (38 percent).
In 2022 and 2023, energy and food prices rose sharply as a result of the Russian attack on Ukraine, driving inflation in Germany to its highest level since reunification at 6.9 percent and 5.9 percent respectively. This causes purchasing power to dwindle and people can afford one euro less.
Study author Jens Kleine from the Research Center for Financial Services at Steinbeis University sees increased interest in the golden precious metal among the generation born between 1995 and 2010. According to the analysis, there were significantly more gold buyers in this group than among the older respondents. Generation Z no longer only knows about high inflation rates from lessons, but also experiences inflation and its effects in their own lives.
Purchases and sales are balanced
In December, the price of gold climbed to 2,135 US dollars or 1,950 euros per troy ounce (31.1 grams) – and was therefore just below the 2,000 euros per troy ounce mark that investors self-assessed in the travel bank analysis of selling their gold would cause.
The fact that daily and fixed-term deposits start to pay interest again would lead to more savers reallocating their investments. Gold is considered crisis-proof because the amount of the precious metal is limited.
In addition, gold pays neither interest nor dividends. However, the relationship between buyers and sellers is balanced, according to Frankfurter Reisebank, which, as one of the largest sellers in this country, supplies the Volks- and Raiffeisenbanks with precious metals.
Gold continues to benefit from geopolitical events
Inflation has eased in recent months, but wars and crises are supporting demand for gold, as is uncertainty about the outcome of important elections in the USA, for example, and expectations of falling interest rates.
Anyone who wants to buy gold bars or gold coins currently has to dig deep into their pockets: from the beginning of the year up to and including April, the price of the yellow precious metal climbed to a record high of 2,431 US dollars per troy ounce. Most recently it was still around 2,300 US dollars (around 2,140 euros).
But this could only be a temporary price correction, as Louise Street of the lobby organization World Gold Council predicted at the end of April: “Looking forward, it is likely that the price of gold will rise much more in 2024 than we saw at the beginning of the year year based on recent developments.”