Germany’s Gold Investment Demand Could Mean Soaring Gold Prices
Don’t pay too much attention to the noise that suggests gold prices could drop as interest rates increase. Those who say this aren’t looking at the big picture. Gold remains undervalued and could reward investors immensely over time.
Understand the dynamics of the gold market changing; those who generally were not known as gold buyers have recently been stepping in.
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Take Germany, as one example. The biggest economic hub in the eurozone has been stepping up its gold purchases over the past few years. Its investment demand is soaring.
Consider this: according to the World Gold Council (WGC), in 2007, German gold demand was just around 40 tonnes. In 2016, it was 187.6 tonnes. Mind you, this is a combined figure for physical gold (coins and bars) and exchange-trade products. If you do the simple math, gold demand in Germany has soared by close to 370% in less than a decade. (Source: “Market Update: German investment market,” World Gold Council, October 5, 2017.)
Survey Says, German Investors Like Gold
If you think that’s all, you could be truly mistaken. These figures could be much higher going forward. Why? Because German investors trust gold.
Kantar TNS, a well-known market research company, did a survey with 2,000 German investors on behalf of the WGC in 2016. Here are a few interesting findings from the survey:
- 59% of investors agreed with the statement “gold will never lose its value in the long-term.”
- 48% agreed with “owning gold makes me feel secure for the long-term.”
- 42% agreed with “I trust gold more than the currencies of countries.”
- 57% of investors said they invest in gold to protect their wealth.
Looking at the survey results, it seems like investors in the country want and like gold. So, it’s not irrational to believe that German gold demand figures could improve further.
Gold Prices Outlook: Patient Investors Could Reap the Biggest Rewards
Dear reader, usually when demand for gold is discussed, it’s India and China that get a lot of attention, and rightfully so. These two countries combined consume a lot of gold. Their demand remains stellar, and there isn’t any sign of a slowdown anytime soon.
But, countries like Germany shouldn’t be ignored, whatsoever. Investment demand from countries like this could really disrupt the gold market, resulting in a massive move upward. Let me set the record straight, Germany isn’t the only uncanny place where gold demand is soaring; there are other countries as well.
As I see it, when it comes to gold prices, patience is key. There’s too much noise directed against the yellow precious metal these days. As a result of this, gold prices haven’t been able to move higher, even when the fundamentals have been improving.
Those who are patient could be reaping massive rewards in the next few years. Those who are ignoring gold prices could be looking at the precious metal later and telling themselves, “I should have bought when it was trading at cheap prices.”
