Crypto investors are switching to precious metals
Experts expect a new all-time high for the price of gold
The Ukraine war sent the price of gold to new highs this year. According to the forecast of the world’s largest gold trader, prices are likely to be exceeded again next year. The Swiss gold hub also benefits from this.
The price of gold is likely to reach new heights in 2023.
Sarah FrattaroliDeputy Head of Economics
“It was a wild ride,” says Henrik Marx (37) about the price development of gold, silver and other precious metals in recent months. Marx is Head of Precious Metals Trading at Heraeus, the world’s largest precious metals dealer based in Hanau, Germany. And indeed, when the Ukraine war broke out in February, the price of 1 kg of gold skyrocketed to almost 60,000 francs.
When the central banks around the world – especially in the USA – started to tighten interest rates in the summer in the fight against runaway inflation, the price of gold fell sharply again. With rising interest rates, it is becoming more attractive to invest assets in a fixed-term account instead of storing gold bars in the bank vault.
Investing in gold instead of bitcoin
The wild ride should continue in the new year. “We are optimistic that the gold price in euros will climb to a new all-time high,” predicted Marx when presenting the annual precious metals forecast. For fear of a recession and thanks to the slowdown in inflation, central banks are unlikely to raise interest rates as sharply as they have in the past – which will support the price of gold.
In addition, central banks around the world are buying more bullion than they have in decades. They want to protect themselves from inflation turmoil and reduce their dependence on the US dollar by holding less foreign currency and more gold.
Private investors are also heavily involved in gold. Among them are likely to be disappointed crypto investors who had hoped that Bitcoin would become the new safe haven. With the price turbulence on the crypto market this year, they experienced their blue miracle.
Swiss refineries working at full capacity
The strong gold price is good news for Switzerland: four of the world’s seven largest gold refineries are located here. Together they process – depending on the estimate – 40 to 70 percent of the gold traded worldwide. Industry leader Heraeus also operates a huge gold smelter in Mendrisio TI.
“The company has been running at full speed for a year or two,” says Marx. This is how it will continue in 2023, is the forecast of the precious metal trader.
And that despite the fact that international sanctions mean that Russian gold can no longer be melted down in Swiss refineries. Nevertheless, Waldimir Putin (70) continues to do good business with the mining and export of gold. According to Heraeus estimates, ten percent of the gold mined worldwide still comes from Russia.
Russian gold for China and India
Critics complain that especially in Dubai gold of problematic origin is remelted – and thus receives the stamp of origin Dubai instead of Russia. “Russia doesn’t need to hide its origins at all,” counters Marx. China and India continue to buy Russian gold without hesitation. Putin doesn’t have to smuggle his gold to the West along tortuous routes, as long as he finds enough buyers in the East.
Putin should be pleased that there are increasing signs in China that the strict zero-Covid policy is being relaxed. Lockdowns, shut down factories and supply chain disruptions threatened to dampen the Chinese jewelry industry’s demand for gold.