Raw materials in this article
?? Inflation is rising
?? Investors in Germany are leaving with gold
?? The price of gold has decreased since the beginning of the year
Consumer and producer prices in Germany and Europe have risen recently. Various reasons are responsible for the current price increase. For example, there are increased energy costs. Demand for crude oil has risen sharply worldwide following the end of coronavirus restrictions. In addition, however, the price per tonne of CO2 emitted has also increased since the beginning of the year, which is also important. Another factor in Germany is the end of the VAT cut, which is expected to lead to the country’s economic recovery in the second half of 2020. Now that the normal tax rate is back in place, prices have risen accordingly.
In August, inflation in Germany reached its highest level in almost 30 years, approaching the 4% mark. In Europe, producer prices rose as much as 12.1 percent in July from a year earlier, which should also have an impact on consumer prices.
Inflation is expected to remain high
In addition, experts do not expect inflation to fall again soon: “Inflationary pressures will remain very high in Germany until at least the end of the year to provide temporary calm,” ZEW economist Friedrich Heinemann told the German news agency. “But even after that, a return to moderate inflation rates below two percent is not at all certain.”
The escape in gold
It is therefore not surprising that investors are trying to protect their money from falling in value and are therefore sinking into the traditional “safe haven” of gold. As the World Gold Council recently revealed in a report, demand for natural gold increased by a whopping 35% in the first half of this year compared to the previous half. During this period, the Germans acquired more than 90 tons of shiny precious metal in the form of rods and coins. This is actually the highest interest rate for 6 months since the crisis year 2009. Although more gold was bought worldwide in the first half of 2021, it only grew at a rate of 20 percent.
The evolution of the price of gold since the beginning of the year
From the beginning of the year, gold investors had to deal with even a minus of about five percent. In the first half of 2021 alone, there was a 6.71 percent drop in supposed inflation protection.
Nevertheless, the precious metal remains popular with German citizens. According to a gold study by ReiseBank and the Steinbeis University in Berlin, the Germans are now storing more than 9,000 tonnes of gold, leaving the Bundesbank far behind.
The future of the price of gold is uncertain
Experts disagree on how the price of gold will continue in the future. While some speculate that the price of the precious metal is likely to fall further as, for example, rising key US interest rates are increasingly being considered, there are others, such as fund manager Diego Parilla, who predict a significant rise in its price. of gold. Ultimately, each investor has to decide for himself whether the gold market fits his own investment strategy or not.
Editorial team Finanzen.net
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Image sources: Julian Mezger