You can now follow the latest news for free through our Facebook page
Click here to subscribe
Investors usually accept the acquisition of gold during crises. It was the result of the pandemic of the emerging Corona virus and its devastating economic effects that raised the demand for gold bars among the traders who had to double their operations.
Depending on where things are, clients in a hurry may not be able to obtain the precious alloys, at least in the short term.
“The phone keeps ringing … orders are pouring on us,” says Alessandro Soldati, director of Gold Avenue, the official agent of BUMP, the world leader in precious metals trading.
Within three weeks, as a result of the Covid-19 virus outbreak, the company’s sales exceeded what it had sold in the last three months of 2019.
The company receives most of the orders online. “We have all the tools to meet this increasing demand,” says Omar Lies, the company’s chairman and headquartered in Switzerland, but the difficulty now is in logistics to ensure deliveries, with many flights canceled.
However, clients have the option to keep their coins and their alloys in safes as most companies selling gold offer storage solutions. Those who prefer to keep their yellow metal under their mattress will have to wait.
US-based GM Pullion warns its customers on its website that “due to the high volume of orders, the delivery period may reach more than 15 working days.”
Gold mines and refineries are closed
This jump in demand “has a positive (for the company) effect but is also negative with delayed deliveries to UK customers,” says William Chesby, director of marketing and media at the Pullion Bay Post, which has also strengthened the customer service team.
There is currently no shortage of gold in practice, with the exception of the newly minted coins, and they have not been available for 48 hours and their inventory has been “limited” compared to other higher-priced products, says Laurent Schwartz, director of Contour Nacional de l’Or.
In the long run, however, the situation may become more complex. “The sector as a whole has been affected,” says Leiss, after several gold refineries were forced to close.
In Switzerland, the “Bamb”, “Valcampi” and “Argur Iraeus” refineries, which account for about a third of the world’s production, are temporarily suspended, at the request of the authorities. On Monday, South African President Cyril Ramavusa imposed a three-week closure in his country, the continent’s largest gold producer and hardest hit by the new epidemic of Coruna in sub-Saharan Africa.
As it happened in 2008
In times of economic crisis, gold often rises, benefiting from its safe haven status.
While many central banks pump massive amounts of liquidity into the financial system, the yellow metal is seen as a good investment to protect from inflation and maintain purchasing power.
John Reed, an analyst at the World Gold Council, says those who resort to this type of product are often “wealthy” or “middle-class” middle-class people rather than wealthy people.
On the other hand, professional investors go to the source directly by purchasing gold-related financial assets from the market that are “easily accessible and cheaper”, as Reid adds, while some individuals “prefer to feel secure by having the assets in their hands.”
After the price of gold at the beginning of the month reached its highest level in seven years, the price of an ounce fell slightly against the dollar, which was also in high demand. But analysts do not believe that the weakness of gold against the dollar will prolong.
We are facing the same phenomenon that we witnessed during the 2008 crisis when gold initially collapsed before gradually rising over the next three years, says Leis.
Topics that may interest you: