Gold is usually popular with investors during crises. The scale of the pandemic of sars coronavirus and its devastating effects on the economy are such that signs, specialising in the sale of physical precious metal groan under the commands.
To the point where, for customers in a hurry, it might be difficult to get hold of precious ingots, at least in the short term.
“The telephone never stops ringing” and “the demands have exploded,” says AFP Alessandro Soldati, director-Gold Avenue-the official dealer of the group, Pamp, the world leader in precious metals.
In three weeks, with the spread of the epidemic, the company has exceeded the number of sales in the last quarter of 2019.
The essential commands are doing online, “we have all the tools to cope with this increasing demand”, assures Omar Liess, president of the board of directors of the company based in Switzerland.
For the moment, the main difficulty is of order logistics to ensure the deliveries, with many flights cancelled. The customers retain the option, however, to keep their coin and bullion in the vaults, the companies specialized in the sale of gold often offering storage solutions.
On the other hand, for those who would prefer to keep their gold under their mattress, they must take their evil in patience.
“Due to volume of orders, expect shipping delays of more than 15 working days”, warns on its website the company JM Bullion, based in the United States.
Mines and refiners closed
This bond request “has a positive impact [for the company], but also negative, with delays to deliveries in the Uk” has explained to the AFP Liam Sheasby, head of marketing and media at BullionByPost, which shoulder also for several weeks, the team in charge of the customer.
There is no shortage of gold itself, except for the parts newly-minted, that were not found for over 48 hours and which stocks are “limited” compared to other products more expensive, ” says Laurent Schwartz, directeur du Comptoir national gold. But in the longer term, the situation could get complicated.
“The industry as a whole is affected,” said Mr. Liess, while several refineries have had to stop their activity.
In Switzerland, these are Pamp, Valcambi and Argor-Heraeus — refiners representing about one-third of the world’s production— that have had to temporarily stop their activities at the request of the authorities.
And the president of south africa Cyril Ramaphosa has imposed on Monday a containment strict three weeks in his country, the first gold producer on the continent and the most affected by the epidemic of coronavirus in sub-saharan Africa.
As in 2008
In a period of economic uncertainty, gold is often values, benefitting from its safe-haven status.
While many central banks inject massive amounts of liquidity into the financial system, the yellow metal is seen as a good investment to protect against inflation and maintain its purchasing power.
Those who turn to this type of products are often of special “high net worth or a part of the middle class is high, rather than ultra-rich”, says John Reade, analyst at the world gold Council.
Professional investors, for their part, tend to buy directly on the market by purchasing financial assets indexed to gold, “more accessible and less expensive”, he adds, while some individuals like the ultimate security of having the asset in their hands”.
After reaching a peak in seven years at the beginning of the month, an ounce of gold has slightly lost its value against the dollar, the latter also benefiting from an increase in demand. But for the analysts, this weakness against the dollar may not last.
According to Mr. Liess, we find the same phenomenon during the crisis from 2008 when gold first collapsed before gradually climb over the following three years.