Swiss Buy Lots of Gold in Pandemic

Swiss Buy Lots of Gold in Pandemic

08 May 2020

The coronavirus pandemic has triggered a spike in demand for gold, especially among Swiss, who have always loved this asset and hoard a lot of it.

Hoarding Gold

Swiss have golden rush since the pandemic’s breakout. Wealthy residents of Switzerland have always had a soft spot for precious metals, especially gold, but turmoil on financial, exchange rates markets due to the pandemic, has triggered even higher demand for physical gold than before. Gold is considered a safe haven assets, even better than CHF – investors also tend to buy Swiss francs in times of trouble, but nowadays its exchange rate is very strong.  Gold seems a better option currently. Last year, total volume of gold bought in Switzerland was 160 tons, with one in five Swiss residents being buyers of gold. Since last year holdings of gold in Switzerland climbed by ten percent in value, and further gains are predicted. According to last year’s study by the University of St. Gallen and gold dealer Philoro, Swiss investors hold in total 920 tons of gold in banks, cellars, safes.

Who Buys Gold?

                Not only wealthy investors store gold, but they are indeed the most likely group to buy precious metals. As gold dealer Philoro’s data shows people with monthly income above 10,000 Swiss francs (as per average exchange rate: 10,265 dollars) are likely in 71% to own psychical gold as an investment. However, households with low earnings, less than 4,000 Swiss francs of monthly income, displays 52% probability to buy gold, which is also high score. In 2019 as much as 43% households with monthly income of at least 14,000 Swiss francs planned to buy gold. According to one providers of psychical gold, Degussa Goldhandel’s showroom in Zurich, an average client spent as much as 5,400 dollars on gold. Recently, the showroom reported ten times better daily volumes, even though there is limited access to it, due to the coronavirus. As Degussa’s CEO Andreas Habluetzel points out those who come to buy gold aren’t speculators, but people trying to ensure their and their families future with wise investments.

Predicted Gains

                Buyers rush now to buy gold because they count on gains. In March price of gold felt down, but in long-term gains are expected. Demand is very strong, especially among independent asset managers that want to add at least several kilos of gold to their clients’ portfolios to have it more diversified and less prone to risk. Those who have bought gold recently or are buying it now, expect gains as prices is predicted to hit 1,800 dollars per ounce from a current level of 1,700 dollars. But at the same time there might be observed problems with supply, as air travel is limited and it threatens supply chains for previous metals, including gold.

Shut Down Refineries

                Additionally to travel air limitations, the supply chain of gold is threatened by shut down mints. Four Swiss refineries had to be shut down due to the coronavirus, which has led to serious issues with providing of psychical gold. Investors turned to coins made of gold or silver, but mints are also closed and won’t be opened till end of May at least. That is why coins are available at a huge premium nowadays.