Play it safe: Investors rely on gold

Gold started the new year with a significant price increase. On Tuesday, the prices for the yellow precious metal temporarily reached around 1,949 dollars a troy ounce (31.1 grams) – the last time they were that high in November 2020. The old year had ended the gold price just below the threshold of 1900 dollars. Now it is around 3 percent higher. Analysts refer, among other things, to inflation concerns.

In the previous year, the precious metal had benefited from its reputation as a safe haven in turbulent times. In view of the corona pandemic, which greatly unsettled many people, the price climbed to a record high in the summer that had previously lasted for about a decade. Investors bet on physical gold such as bars and coins and securities such as funds. In August, the precious metal cost up to around $ 2075 during the day.

Then, among other things, profit-taking caused the price to fall again. Confidence grew. Many stock exchanges made strong gains and recovered from significant price losses. In the annual balance sheet, however, gold prices rose by around a quarter.

Up to 227 tons of gold in the safe

The development in securities on gold is similar. For example, the gold holdings in the exchange-traded bearer bond Xetra-Gold rose within twelve months from 203.2 to 216.9 tonnes at the end of the year – an increase of 13.7 tonnes or 7 percent. At the end of July, according to the issuer Deutsche Börse Commodities, up to 227 tons of gold were stored in the central vault for German securities – a record. Recently it was about 10 percent less.

Xetra-Gold is therefore the leading physically deposited gold security in Europe. The stock increases when investors buy Xetra Gold units on the stock exchange. One gram of gold is deposited for each unit certificate. The managed assets of Xetra-Gold amounted to 10.7 billion euros at the end of the year. With Euwax Gold, the Stuttgart stock exchange also offers an exchange-traded security backed with gold.

In 2020, Xetra-Gold had another record holdings, says Steffen Orben, Managing Director of Deutsche Börse Commodities GmbH. The peak was reached in the summer – driven by the high level of uncertainty resulting from the pandemic. Here it became clear that investors were looking for a safe haven in uncertain times that would protect their capital from depreciation. The development also shows that gold has established itself as a separate asset class not only with institutional investors, but also with asset managers, family offices and private investors.

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To the detailed view

Xetra Gold investors are entitled to delivery of the securitized gold. They have used it 1,479 times since it was introduced in 2007, and 6.8 tons of gold have been delivered. The effect of the recent price increase in the holdings of Xetra-Gold can only be seen with a slight delay, says a company spokesman. The price traces the gold quotation one to one; a Xetra-Gold share currently costs around 51 euros. In the summer it was up to almost 56 euros.


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