Germans seek refuge in gold

Due to low interest rates and rising inflation, Germans are increasingly looking for their Refuge in gold. In fact, in the first half of this year, Germans bought the most gold since the first half of 2009, the height of the credit crisis. Figures from the World Gold Council show that interest in the precious metal is increasing worldwide, but that Germans in particular are much more Buy gold. At 90.5 tonnes, the demand for gold coins and gold bars in Germany was even 35% higher than in the second half of last year. In comparison, global demand increased by about 20% over the same period.

For many Germans, gold is a way to protect their wealth from inflation and currency depreciation. The hyperinflation of the Weimar Republic, exactly one hundred years ago, is still in the collective memory. Many Germans lost all their savings at that time, because the money became completely worthless in a few years. Nowadays, the fear of hyperinflation is not so great, but more and more people are concerned about the purchasing power of money. Especially in Germany, where interest rates are extremely low and inflation has been rising rapidly in recent months. There is also a lot of dissatisfaction in Germany about the ECB's monetary policy. The central bank is said to be guided too much by the southern euro countries and to pay too little attention to the thrifty Germans.

Negative interest rates

Due to a flight to safety, interest rates in Germany have fallen much faster than in other European countries. At the time of writing, a 10-year government bond yields a negative yield of -0.4%. Wealthy savers even pay half a percent interest at many German banks. Meanwhile, inflation has risen to more than 3%, the highest level in more than ten years. This means that German savers lose almost four percent of their purchasing power every year. This makes it more attractive to buy gold, because the precious metal does not have negative interest rates. It also offers better protection against currency depreciation in the longer term. Over the past fifty years, the Gold price increased by an average of 8% per year.

German savers have even more reason to invest in precious metals. Many banks are located in not waiting at all on their customers' savings. As we wrote earlier, banks try to entice savers to move to another bank. They can't get rid of customers' savings and therefore park them at the ECB, on which they pay half a percent deposit interest per year. Banks are increasingly passing these costs on to savers. That's why buying gold has become the new saving for more and more people in Germany.

This contribution was made from Geotrendlines