Arabian Pure Gold reports that it experienced a 117% increase in people investing in physical gold on Tuesday, compared to the daily average for 2018, as investors fear that Germany could slip into a full blown recession with severe consequences for the global economy.
Josh Saul, CEO of the investment firm that buys and sells gold elaborates. “76% of all clients yesterday were first time investors of physical gold (an increase of 87% compared to the same period last year). The majority of them were concerned that if Germany does enter a recession given the poor economic indicators, this could create contagion within the EU similar to the events of the 2008 crash, including a considerable fall in equities and extreme currency volatility. 63% of these first-time investors were removing exposure to equities and taking refuge in physical gold in anticipation of even more financial volatility than has been evident for several months now. It’s been quite a few years since we’ve experienced a unified sense of negative sentiment. The contrast in sentiment between now and last year is that there seems to be a fear of immediate risk as opposed to the more general or longer-term risk that has previously been voiced,” Saul says.
“Arabian Pure Gold experienced a 96% increase in German nationals living in the UK and Germany purchasing physical gold rather than leaving their money in banks or in the financial markets, for fear of systemic counter-party risk. With poor results and wide-ranging management changes, Deutsche Bank’s state of health remains a concern which is adding to the volatility,” he adds.
Since Monday, the firm reports a 176% increase in people removing exposure to equities within their pension/SIPP to purchase physical gold within the same vehicle. The overwhelming concerns our clients have are fears of a Germany recession and geopolitical worries stemming from the Chinese and US trade war and tensions between Syria, Russia and the US. People are concerned that their retirement savings could evaporate and are buying gold as insurance should these risks materialise.
“Our clients who are investing in physical gold are not purely looking for growth. Rather they are looking for the safety and security element that physical gold provides. Gold tends to increase when other markets decline and therefore it provides a good hedge during times of uncertainty. Many of our clients do not want their gold to increase substantially as this would be the result of what we all fear: economic decline and financial volatility,” Saul adds.
Source: FTSE Global Markets
