The coronavirus epidemic has hit many industries, including the gold market. Experts expressed their opinion on how much this precious metal will rise in price, and whether ordinary citizens should invest in it.
According to official estimates, in 2020, approximately 200 thousand tons of gold were mined in the world. 50% of the precious metal received went to the manufacture of jewelry, 21% is in the hands of investors, 19% is owned by governments of different countries, and the rest is used in a variety of fields, including industry.
Global gold prices are rising, so we can expect an increase in value in the domestic markets. According to TeleTrade analyst Sergey Rodler, almost 60% of all gold is now bought by India and China. However, recently even they have reduced its consumption by about 7-9%.
According to the expert, jewelers are likely to raise prices for their products, though not very much – within 10%. Nevertheless, companies will surely suffer significant losses, since after quarantine is over people are unlikely to buy jewelry in bulk, because these expenses can hardly be called priorities. Thus, jewelry stores will face a drop in sales and, most likely, will be forced to resort to staff reductions.
In addition, an analyst with the Center for Exchange Technologies, Maxim Oryshchak, does not exclude that the share of low-quality gold jewelry will increase in the Ukrainian market. This can be either product in which the share of precious metals will be reduced specifically to make the price more affordable for buyers. Or, in the second version, dealers will begin to sell fakes under the guise of gold jewelry, in which the proportion of gold, if any, is very small. Moreover, in this case, this fact will be hidden from the buyer, and the jewelry itself will be sold at an inflated price.
As Oryshchak emphasizes, in these circumstances, when buying gold products, it is better to contact large companies that have long been known in the market and have managed to establish themselves well. Such sellers, most likely, will not get involved with low-quality goods, so as not to risk reputation and at the same time will be able to offer good discounts in order to attract buyers.
At the same time, experts remind that investing in the purchase of jewelry is not worth it since if necessary they can only be sold for the cost of the metal and stones themselves, that is, 2-3 times cheaper.
In general, according to analysts, the demand for gold in the world market is growing today. It is acquired by governments, private investors, investment funds in order to protect themselves as much as possible from the consequences of the crisis.
According to Sergey Rodler, at some point in the United States and the EU, a shortage of precious metal arose due to a sharp increase in demand from the population, but now these problems have been resolved and gold sales have intensified again.
True, according to experts, investments in gold may not be so profitable if you do not take this issue seriously and do not analyze the situation. The fact is that at present some citizens buy gold at almost any price that the bank will offer. However, for example, in Ukraine, the difference in price between the purchase and sale of precious metals is 20%. That is, sales in the future should grow by at least 20% so that the owner of the gold does not lose anything.
According to an analyst at the Center for Exchange Technologies, Maxim Oryshchak, gold will become a profitable investment if its price, regardless of speculation, grows by 2 thousand dollars in the next month. In addition, he emphasizes that buying coins and bullion is not worth it at the time of a sharp jump in prices.
Oryshchak also notes that investing in gold bullion can be risky due to the fact that even due to a small scratch, their value can fall by 30%. Thus, in his opinion, buying gold coins is much more profitable, because in Ukraine they are not subject to VAT, and it is not necessary to rent a bank cell for them.
According to analysts, gold prices will rise in the near future, as the central banks of many countries have clearly decided to resort to the methods that were already used during the 2008 crisis. Then the cost of the precious metal for several years increased by 160%. This time, the price of gold can once again reach a historic high and amount to $ 1800 per ounce, and later at all – $ 2500 per ounce.
True, as Maxim Oryshchak notes, at present, the growth in the cost of precious metals is not really justified by anything and is rather speculative and caused by excitement and panic due to coronavirus.