Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Facing Inflation Threat, German Investors Loading Up on Gold

  by    0   0

While most American investors have faith that the Federal Reserve can and will successfully tighten monetary policy to fight inflation — or have simply bought into the “transitory” inflation narrative — Germans are loading up on gold as a hedge against growing inflationary pressures.

Through the first half of the year, gold coin and gold bar demand in Germany hit the highest level since 2009 – the aftermath of the 2008 financial crisis. First-half demand for bar and coins in Germany increased by 35% from the previous six months, compared with a 20% increase in the rest of the world, according to World Gold Council data.

Raphael Scherer serves as the managing director at Philoro Edelmetalle GmbH. He told Bloomberg that gold sales for the company are up 25% on what was already a strong 2020.

We have a long history of inflation fear in our DNA. Now the inflation risk is picking up. The outlook for precious metals is very positive.”

Given Germany’s experience with hyperinflation under the Weimar Republic, it comes as no surprise that Germans are wary of inflation.

Gold investment took off in the country in the wake of the 2008 financial crisis and has been strong ever since. The global recession after the ’08 meltdown led to extremely loose monetary policy in Germany. The country has been in a negative interest rate environment for several years, and the Bundesbank has done billions in quantitative easing. Two and five-year government bonds have traded at negative yields since 2015.

The World Gold Council summarized why Germans tend to turn to gold when inflation looms.

German investors have an acute awareness of the wealth-eroding effects of financial instability. Hyper-inflation in the 1920s lingers on in the collective memory but, perhaps more importantly, German investors have seen fiat currencies come and go: in the past 100 years, Germany has had eight different currencies. It should come as no surprise that, when faced with such an unsettling economic backdrop, German investors turned to gold – which during our field research one investor described as an enduring currency – to protect their wealth.”

Gold investment picked up even more during the pandemic. Last year, Germans bought more coins and bars than any previous year.

In July, the German inflation rate jumped to the highest level in more than a decade. An article published by Bild was headlined  “Inflation is Eating Up Our Savings.” It included a graphic that showed how gasoline prices have surged, as well as steep price gains for other consumer goods.

The World Gold Council said that even if German inflation turns out to be transitory, “it seems unarguable that it is preying on investors’ minds.”

And that tends to go hand in hand with maintaining gold’s appeal. While 2020 set a very high bar that may prove challenging to repeat, German investment is likely to stay elevated for at least the remainder of this year.”

Download SchiffGold's Gold vs GLD EFT's Guide Today

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Feds Run Second-Biggest Budget Deficit in History; Spending Up from 2020 Record

The federal budget deficit for fiscal 2021 came in at $2.77 trillion. It was the second-largest deficit in US history, just behind last year’s $3.13 trillion shortfall. Despite falling shy of the deficit record, Uncle Sam spent even more money in 2021 than it did during the depths of the 2020 coronavirus recession.

READ MORE →

Stagflation Warning: Atlanta Fed GDP Estimate at 0.5%

As governments shut down the economy in response to COVID-19 and the Federal Reserve put money printing into hyperdrive, we warned that it was a recipe for stagflation. Today, it looks like stagnation is here. Stagflation is an economic environment with rapidly rising prices, a weak labor market, and low GDP growth. It’s looking more […]

READ MORE →

Chinese Gold Demand Continues to Strengthen

Gold demand in China was up in September, as the country approaches a peak gold-buying season. Both gold withdrawals from the Shanghai Gold Exchange (SGE) in September and gold imports in August were up, a sign that the Chinese gold market continues to recover after it was hit hard by the coronavirus pandemic.

READ MORE →

JP Morgan Chase CEO Worried About Higher Than Expected Inflation

With CPI data once again coming in hotter than expected, it’s getting harder and harder for the mainstream to swallow the “transitory inflation” narrative. And some people are starting to worry. During an earnings call, JPMorgan Chase CEO Jamie Dimon expressed concerns about higher than expected and persistent inflation ahead.

READ MORE →

American Consumers Continue to Run up Credit Card Debt

Consumer borrowing has slowed somewhat from the record level we saw in June, but Americans continue to pile on the debt. Consumer debt grew by $14.4 billion in August to $4.35 trillion, according to the latest data from the Federal Reserve. That represents a 4% increase. This follows on the heels of a 4.8% increase in […]

READ MORE →

Comments are closed.

Call Now