The three biggest markets are driving the dizzying growth

During this year, the gold MARKET is going through dizzying jumps in price. It records a new record almost every month.

As experts say, in the current economic environment, where economic growth is unstable and most economies are recovering from record inflation, gold has become a very attractive investment. Both for central banks and for citizens. State reserves are growing, and in parallel, gold “straws”.

The gold price and the intense growth of the previous months are driven by the biggest markets. As statistics show, China, India and the USA are the biggest players on the world stage of yellow metal at the moment. The three largest markets annually “turn over” more than 2,000 tons of gold, the company “Taveks zlato i srebo” announced.

Every year, the Chinese market grows by about 984 tons of gold. In addition, the People’s Bank of China is also a huge buyer of this precious metal. In the past three years, this institution bought about 300 tons.

-If in the future China continues at this pace, it could overtake many Western countries such as Italy or France in terms of gold reserves. Gold is seen as a traditional and stable investment in China. Gold is also an indispensable gift at all ceremonies in China, especially at weddings. It is such a popular investment that even many commercial banks in China offer to buy gold on the spot or through a bank account. Also, China is a big producer, so gold is bought a lot for industrial purposes, says Georgi Hristov from “Tavex Gold and Silver”.

After China, India has the highest demand. This market buys about 850 tons of gold every year. Gold is treated as a safe and traditional investment that is necessary to preserve its value. And Indian weddings are known for the amount of gold used in them. Also, like the People’s Bank of China, the central bank of India is also a big buyer of gold. In the past two years, this institution bought about 100 tons of gold.

In third place is America, on whose market about 190 tons of gold are bought every year. In addition, America has by far the largest gold reserves in the world, which is about 8,133 tons. This reserve at current market prices is worth about 700 billion dollars.

-Like the financial center of the world, the American market has the greatest influence on the price of gold. An elaborate system of trading ‘paper’ gold on the exchange allows US investors to use gold as an exchange-traded financial instrument to hedge their portfolios against inflation and economic volatility. In addition, physical investment gold in America is also treated as a safe investment that can be used for a pension fund. Which means that profit from gold is not taxed if it is used for pension fund purposes, says Hristov.

In addition to these three largest markets, significant trade in this precious metal also takes place in Germany, Turkey and Saudi Arabia. As experts explain, an important player is Russia, which has about 2,340 tons of gold in its reserves and is a significant gold producer.

SERBIA “GOLD CHAMPION” OF THE WESTERN BALKANS

According to the latest information from July 2024, the National Bank of Serbia bought an additional five tons of gold worth 350 million euros, which puts our gold reserves at about 47 tons of gold worth almost 4 billion dollars.

– This is an incredible jump, especially when we consider that at the beginning of 2012, Serbia had around 15 tons of gold and that it tripled its gold reserves in a decade. The jump in the price of investment gold over the past 10 years proves that this investment has really paid off for the National Bank of Serbia, says Hristov.

Serbia has by far the largest gold reserves in the Western Balkans, it even has more than twice the amount of reserves of all other countries combined. Macedonia is second in the Western Balkans with 7 tons of gold, followed by Albania with 3.5, Slovenia with 3.1, Montenegro with 1.9, Bosnia and Herzegovina with 1.5 tons.

-When we look at the other neighbors, Romania (103 tons), Bulgaria (40 tons) and Hungary (94 tons), we can see that Serbia copes well when the difference in the size of the countries is taken into account. Moreover, Serbia ranks much better than many other European countries such as the Czech Republic (41 tons), Slovakia (31 tons) and is even at the same level as Finland (49 tons), says Hristov and adds that Croatia is at the bottom of this ranking.

Since it sold its gold bars in 2001, the Croatian National Bank was officially disinterested in further purchases. They treated gold as an unattractive investment. Of course, over time this changed and it turned out that it was not the best decision and that gold reserves are somewhat necessary. Two years ago, Croatia joined many countries of Central and Eastern Europe and bought around two tons of gold. Hristov emphasizes that a small or zero amount of gold reserves puts the country in an awkward position where if a serious recession occurs and the country cannot secure external financing, its economy is in trouble.

SHELTER FROM INFLATION

Most of the countries that buy gold, treat it as a shield against inflation, consider it a safe haven investment with the least risk.

-In periods of geopolitical tensions, economic instability and high inflation, gold appears as the safest reserve that a country can have. It is universal and accepted everywhere, unlike paper currencies, says Georgi Hristov and adds that gold reserves instill confidence in an economy and in the currency of that country.

He indicates that, in situations where there is a period of severe economic decline, when borrowing is no longer an option, the country must settle its debts and balance its budget. Strong gold reserves are, explains Hristov, a savior in such a situation and a signal to investors and other countries that the country is monetarily responsible, that in times of crisis it can pay off its debts on its own.

-A current example of this is the current situation in Argentina, which has been going through a series of bankruptcies and recessions for the past 30 years. In addition, they also record the highest inflation rate in the world – 266 percent. The new government in Argentina is trying to solve these problems as soon as possible, but the problem is that they have lost the trust of international financial institutions. Argentina has no one left to borrow money from. Now Argentina’s government wants to offer its gold reserves as collateral to secure the financing it needs. This short example represents the importance of gold reserves, explains Hristov.

(rt.rs)

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