FRANKFURT (dpa-AFX) - Bars, coins, jewelry - the gold treasure of the people in Germany has become somewhat smaller again after the corona boom. At the beginning of the current year, 9034 tons of the precious metal were privately owned in Germany, as researchers from Steinbeis University Berlin determined for Reisebank. In the previous survey in 2021, a record volume of 9089 tons had been reached.

The pandemic boosted demand for gold as a safe haven during the crisis. Some investors obviously took advantage of the subsequent surge in the price of gold to turn their holdings into cash. However: "In view of the high prices for gold, it was to be expected that more people would sell gold than buy it. However, the study shows that these figures are balanced," said the Frankfurt-based Reisebank, which is one of the major sellers in Germany and supplies precious metals to the Volksbanken and Raiffeisenbanken, among others.

Almost six percent of the world's gold reserves in German hands

Gold holdings held by private households in Germany for investment purposes in the form of bars and coins actually increased by 35 tons to 5229 tons compared to the 2021 analysis. The remaining 3805 (2021: 3894) tons are gold jewelry. Together with the 3353 tons (as at 31.12.2023) held by the Bundesbank, 5.9 percent (2021: 6.2 percent) of the global reserves of the precious metal are in German possession, according to the figures.

If the entire gold holdings of private households in Germany and the Bundesbank were packed into a cube, it would have an edge length of just over 8.6 meters. At the time of the survey, this gold treasure was worth around 750 billion euros (gold price on 29.1.2024). According to the calculations, gold held by private individuals in the form of coins and bars for investment purposes accounts for 315 billion euros.

According to the analysis, slightly less than two thirds of German citizens (61%) own gold in the form of jewelry, bars or coins or indirectly via a special security such as "Xetra-Gold" (Deutsche Borse/Frankfurt) or "Euwax Gold" (Borse Stuttgart). At Deutsche Borse, the amount of gold held in custody for investors decreased last year. At the end of December 2023, 198.7 tons of the precious metal were stored in the company's vaults in Frankfurt. A year earlier, the figure was 231 tons; as at 30 June 2022, holdings had reached a record high of 242 tons.

Rising savings interest rates as an alternative

Deutsche Borse assessed the downward trend in its Xetra-Gold annual balance sheet at the beginning of January 2024 as a "normal reaction" of investors to the market environment. In December, the gold price had climbed to 2135 dollars or 1950 euros per troy ounce (31.1 grams) - and was thus only just below the 2000 euros per ounce mark that would tempt investors to sell their gold, according to the Reisebank analysis.

In addition, the turnaround in interest rates had "created short-term yield opportunities", explained Michael Konig, Managing Director of Deutsche Borse Commodities, the issuer of Xetra-Gold, at the beginning of January. Since the European Central Bank (ECB) ended the phase of zero and negative interest rates in the summer of 2022 and subsequently raised key interest rates in series, overnight and fixed-term deposits have become attractive again for savers. Gold is considered crisis-proof because the quantity of the precious metal is limited and gold never completely loses its value. However, gold does not pay interest or dividends.

Precious metal as inflation protection

Some bank advisors promote gold as a kind of timeless currency and a hedge in times of high inflation. In the Reisebank survey, those who buy gold for investment purposes actually cite protection against inflation as their primary motive (38%). In 2022 and 2023, energy and food prices soared as a result of the Russian attack on Ukraine, driving inflation in Germany to its highest levels since reunification at 6.9% and 5.9% respectively. This is causing purchasing power to dwindle and people can afford less for one euro.

"Generation Z is no longer only familiar with high inflation rates from the classroom, but has experienced inflation and its effects for themselves. Against this backdrop, some of them have bought gold for the first time in recent years," explained study author Jens Kleine from the Research Center for Financial Services at Steinbeis University. According to the analysis, there were significantly more gold buyers in the generation born between 1995 and 2010 than among older respondents.

Inflation has eased in recent months, but wars and crises are supporting the demand for gold, as are uncertainties about the outcome of important elections, for example in the USA, and the expectation of falling interest rates. In the analysis for Reisebank, three quarters (75.2 percent) of gold investors stated that they would continue to purchase the precious metal for investment purposes. However, this figure was slightly higher in the previous surveys in 2019 (78.1%) and 2021 (76.6%).

Anyone wanting to buy gold bars or gold coins currently has to dig deep into their pockets: from the beginning of the year up to and including April, the price of the yellow precious metal climbed to a record high of 2431 dollars per troy ounce (31.1 grams). Most recently, it was still around 2300 dollars (around 2140 euros). However, this could only be a temporary price correction, as Louise Street from the lobby organization World Gold Council predicted at the end of April: "Looking ahead, it is likely that the price of gold will rise much more in 2024 than we expected at the beginning of the year based on recent developments."/ben/DP/men