Gold Crisis is Growing

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Gold has been considered a safe haven for years. People turn their money in gold in times of crisis and protect their capital in this way.

With the number of Kovid-19 cases around the world approaching almost a million, people started to buy gold again. But even though the demand for gold increased, there was a problem about supply.

Many flights were canceled due to the coronavirus, many refineries were quarantined. Some gold mines even began to close. In the articles we shared in the past days, we talked about how this caused a problem. It seems that the problem has become so serious now that jewelers are trying every way to find gold.

Function Not Length
It is now very difficult to send gold from Switzerland to London and from London to New York because of the coronavirus. But the problem is not only limited to this.

Of course, there is no shortage of gold in centers like England and Switzerland, there is still a large amount of gold here. But the problem is this: big banks and institutional investors generally prefer to buy 400 ounce gold bullion. Small investors vs. one ounce etc. they prefer to buy gold. While the demand for both banks and small investors has increased this much, which one’s demand will be met?

Under normal circumstances, gold was produced in line with the wishes of both banks and small investors. In other words, he extracted gold of various sizes from refineries in Switzerland. However, these requests cannot be fulfilled at the moment, since many refineries are closed and there are problems with gold shipments.

In other words, both large and small investors are trying to switch to gold and use the ‘safe harbor’ feature of gold in order to protect their capital. But at present, rather than the function of gold, its size is more talked about.

The Helplessness of Jewelers
This situation has caused serious problems in many countries. Worldwide demand for gold has increased, but jewelers are unable to meet this demand.

According to the information provided by Bloomberg, some jewelers are now trying to buy gold from customers. Jewelers contact customers who want to sell their gold and buy gold from them, and sell it to customers on the waiting list. Mark O’Byrne, founder of a goldsmith in Dublin, says:

“People want to buy gold, not sell gold. We currently have a buyer waiting list. We asked if anybody wanted to send mail to our customers and sell gold. Only 1 or 2 out of every 99 people we send mail want to sell gold. ”

Prices Are Increasing
There is a very big disconnection in the supply chain in the gold market right now. Refineries are unable to meet the demands of the goldsmiths because of the coronavirus, as the goldsmiths do not receive gold from the refineries. As demand increased so much and supply decreased so much, of course, the price of gold began to rise.

For example, a company called Argor-Heraeus SA in Switzerland sells pound gold for 6% more than the spot price since it has to close its refineries. Ronan Manly, a BullionStar analyst, says this:

We witness an unprecedented situation. There is a huge increase in demand and the difference between physical gold prices and spot gold prices continues to widen.

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