Gold boom brings traders historic income
Published: Friday, Dec 6th 2024, 12:40
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The soaring gold price is causing a boom among gold traders. The number of customers has skyrocketed as the price of gold has risen by over a third to a high of just under 2800 dollars per troy ounce (31.1 grams) by the end of October. The gold trading industry is talking about a historic year.
"Over the course of the year, we recorded record customer numbers in all of our 35 stores. In recent weeks, the number of people wanting to sell gold has tripled," says Eve Conesa, Head of Marketing at jewelry and watch retailer The Swiss Collector, in an interview with the news agency AWP.
Buying and selling had already been going well during the pandemic, says Conesa. But in recent months, business has been more turbulent than ever before because gold is considered a "safe haven". Her company's sales in the current year are the best in its history.
Customers are beating down the door
Gold Service, which has around a dozen branches in Switzerland, is sounding the same note: "We have 20 to 30 percent more customers than before, and even more in recent weeks," says Managing Director Yann Bouillonnec.
The trend is more towards selling, as people who have bought gold want to realize their profits, says Bouillonnec: "However, a lot of gold is also being bought, as it is a long-term investment. There have always been ups and downs, but the price has risen continuously over the last 30 years."
Both expert houses for buying and selling gold say that their customers are normal people. Only sometimes are there a few very rich people among them. Most of them sell jewelry that is inherited, out of fashion or broken.
But there are also sales of large and small bars or coins. The sales volume ranges from a few grams to several kilos. "Just 100 grams of gold can fetch the seller over 5,500 francs, depending on the degree of purity," explains Bouillonec.
Degussa Goldhandel, one of Europe's largest gold traders, says it has 50 percent more customers than before the summer. The company, which mainly buys and sells bars and coins, is experiencing a record year, says Andreas Hablützel, head of the company, which is part of the Degussa Group. He did not want to give specific figures. According to the latest available figures, the Group company generated sales of 2 billion Swiss francs in 2017.
Low stock levels
Sales are high at the moment, says Hablützel: the purchases include inherited gold bars, but customers also want new bars. Procurement was somewhat complicated in the summer, but "our stocks are sufficient to meet demand," says Hablützel. Degussa Goldhandel has the advantage of selling its own gold bars, which are supplied by the foundries it works with.
Stocks at The Swiss Collector are currently running dry due to the gold rush. Supplies are tight, said Head of Marketing Conesa. The company is waiting for new deliveries from the foundries.
Gold Service boss Yann Bouillonnec speaks of individual delays in supplies. But there is no bottleneck. The company, which is supplied by the gold smelter Argor Heraeus, only holds small stocks for security reasons.
Gold prices fluctuate
Despite the upward trend, gold prices continue to fluctuate. From a record high of 2790 dollars per ounce at the end of October, the price of gold has fallen again to 2640 dollars.
Due to the fluctuations, trading companies adjust their prices at least once or even several times a day. Degussa Goldhandel even relies on real-time prices. "We update our prices every five minutes thanks to an automated system," says the company boss.
The London Bullion Market Association (LBMA) also sets a mid-market price twice a day, which traders around the world use as a guide. They add the fees for their services to the gold price, which are in greater demand than ever before.
"We have taken on the role of intermediary for banks that prefer to invest rather than sell physical gold. We have the expertise to value gold and advise our customers," says Bouillonnec.
"Golden age" likely to continue
The "golden age" looks set to continue in the coming year: Experts estimate that the price increase is likely to continue, albeit not as strongly as before. "There will therefore be no shortage of customers," says Conesa, Head of Marketing at The Swiss Collector. This is because there is a culture of investing in gold in Switzerland.
This is because 22 percent of Swiss people own gold in the form of coins and bars, not including jewelry, according to the "Precious Metals Study 2024" conducted by the University of St. Gallen (HSG) on behalf of precious metals dealer Philoro and published at the end of October. According to the study, every inhabitant owns an average of around 101 grams of gold worth CHF 7521.
Taken together, the Swiss are estimated to hoard around 200 tons of gold with a value of almost CHF 15 billion. Owners store a fifth of this at home, while two thirds are in bank vaults.
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