All risk insurance or diversification tool, gold finds favor with savers

With this new crisis, gold could break its historic record of 2011.

With a price of 54,500 euros in mid-April, gold bullion has never been more expensive. It has since returned to around 48,630 euros, but the yellow metal fulfilled its role as a safe haven during the crisis. After having progressed since the beginning of the year by 24% at the height of confinement, it still posted an 11% gain. The gold ounce, meanwhile, has increased by almost 12% since 1er January at over $ 1,700 an ounce. It was certainly already on a very favorable trend, with a gain of 19% in 2019. But the pandemic due to the new coronavirus gave it an additional boost. “Gold has played its role of insurance of last resort: its price increases in the event of economic, financial or geopolitical disturbances”, comments Laurent Schwartz, director of the Comptoir national d’or.

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Beyond the health crisis, the trend remains favorable for the coming months.

“The fundamentals remain very positive. Gold could break its record of $ 1,921, reached in September 2011 “, says Arnaud du Plessis, manager specializing in gold and natural resources within the management company CPR AM.

Because the main performance driver for gold remains well oriented. “Central banks, including the US Federal Reserve, pulled out heavy artillery to support the economy and markets in the crisis. This should allow real rates, that is to say adjusted for inflation, to remain very low, or even negative, for long months, which would be very favorable for gold “, adds Arnaud du Plessis.

Protect your heritage

Indeed, like real estate, gold is a real asset that helps protect against inflation. “Some customers fearing an inflationary scenario turn to this value”, remarks Valérie Spies, director of clientele at Neuflize OBC bank. Many savers have been interested in yellow metal in recent weeks: 7% of French people now want to buy gold to save against 1% before the health crisis, according to an OpinionWay poll for conducted in late April. “The main concern of our customers is the protection of their wealth through diversification, allowing better cushioning of the market jolts”, for his part recalls Valérie Spies. Whether it is all-risk insurance or a diversification tool among others, gold has found favor with individuals.

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“Our sales doubled in the first four months of the year compared to 2019”, notes François de Lassus, consultant for CPoR Devises, an establishment which subcontracts the purchase, sale and conservation of gold for banks and their customers. It was possible to buy gold during the confinement, through websites, its bank branch or through pharmacies such as those in the Stock Exchange area operating by telephone.

“We were able to ensure home delivery to buyer customers within a very short time given the situation. Those who wanted to sell their gold, however, had to wait until the reopening of stores on May 11 “, specifies Laurent Schwartz.

The latter adds that the average shopping basket reached 31,000 euros in March and April, more than double the previous year in the same period. Sales mainly concerned ingots and small ingots (from 5 to 500 g) at the more reasonable unit selling price.

Suspended quotes

These products do not suffer from supply problems since they are regularly manufactured by founders. Conversely, pieces such as the Napoleon 20 francs, a true benchmark on the French market, are in limited numbers. “We have decided to suspend trading in Napoleon between March 19 and April 2 due to supply difficulties in the face of very high demand. The risk was to see the premium fly away “, explains François de Lassus.

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As a reminder, the premium is the difference between the price of the coin and its value calculated according to its weight in gold. It stood between 3 and 5% at the start of the year on the Napoleon and today reaches 10%, against 25% in 2011 at the height of the economic crisis. “The current level of the premium reflects the strong attractiveness of the coin, but it remains reasonable”, Judge François de Lassus, who also suspended the listing of other coins, such as the 10 Napoleon francs and the US $ 5.

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