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Violent markups on bars and coins

I.n the first weeks of the crisis, Germany’s private investors overran gold trading houses. Many retailers reported difficulties in delivering goods at all. If you absolutely wanted to have physical gold, you should pay high premiums. But by now that should have calmed down: In mid-May, the gold traders had given the all-clear – the situation had “relaxed” overall, according to the Heraeus precious metals group.

But investors who are currently looking for gold coins and small bars are reporting something completely different. On the website of Degussa Goldhandel, according to company information “German market leader for your investment in precious metals”, there are sometimes very large “spreads”, that is, gaps between the buying and selling prices.

Example Krugerrand

Krugerrand gold coins for a tenth of an ounce, for example, can be found there for sale for 205.50 euros, and only 153 euros for purchases. So you pay 34 percent more. For the gold coins “Vienna Philharmonic Orchestra” at a tenth of an ounce, 152 euros are paid in the purchase, but 204.70 euros in the sale. The American coin “American Eagle” at a tenth of an ounce also has a purchase price of 152 euros and a sale price of 204.70 euros. And with the Australian silver coin “Koala”, the spread is 51 percent in some versions, buy prospects report: “You can never get that as an investor.”

Upon request, the company said that there had been bottlenecks in the entire value chain in connection with the corona epidemic. In addition, the delivery of certain investment coins from abroad was partially interrupted. The difficult market environment has resulted in prices generally increasing in relation to the gold market price.

Added to this would be the currently rising costs for dealers in the transport and logistics sector. At the height of the pandemic, the above factors would have resulted in a significant supply shortage facing enormous demand. It is still “selective”. “In April and May 2020, Degussa also recorded a volume of requests not seen in the entire ten-year history of the company.”

No relaxation

The markups on the gold price were “slightly down” overall, but there was still no “relaxation”, said Robert Hartmann from the gold trading chain Pro Aurum. In the industry, however, one is surprised about the large price differences between different providers. The premium (“premium”) on the gold price for Krugerrand coins, which is smaller than the “spread”, is currently around 6.1 percent. It was almost 13 percent at the top, about 3 to 4 percent normal. The premium for the “Vienna Philharmonic Orchestra” is currently around 5.6 percent. The “American Eagle” and the American gold coin “Buffalo”, on the other hand, are still unusually expensive, both of which are significantly above the “Philharmonic Orchestra”.

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