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Local and global Gold demand at record levels

Picture: Bloomberg News

Picture: Bloomberg News

Published Oct 19, 2017


JOHANNESBURG - Gold has generally held its status as an investment haven in times of global uncertainty, disparate economic growth across countries and particularly when geopolitics take the center stage as they have done in recent years.


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Share Investing Chief Executive Officer, Aneesa Razack said “This is particularly because of its properties as both a hedge against inflation, and its pricing in dollars – the reserve currency globally”.

Earlier this year, reports from Rand Refinery (Pty) Ltd highlighted that Krugerrand production reached 23-year highs. Globally, China, India, Germany and the US accounted for 58 percent of global demand. 

The demand for Gold has been increasing, with developing economies accounting for two thirds of the growth in demand, led by China and India. In addition to this, the gold mine supply is expected to peak in 2017, which is supportive for a bullish view on gold prices - this is supported by a few big global players like Goldman Sachs who recently revised their gold price forecasts upwards.

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Krugerrands keeping the luster

Razack said “Krugerrands are the cheapest way to invest in the gold bullion as investors have the option to purchase fractional ownership from as little as 1/10th of an ounce at the prevailing price. Investors may however also get gold exposure at accessible prices through Gold ETFs, which of course are not a direct investment into physical bullion, but rather track the price of gold.”

Krugerrands have proven to be a valuable investment choice as the value of 1 ounce of a Krugerrand has increased by 759 percent since 2000, outperforming all other asset classes, while the price of Gold has increased by roughly 355 percent over the same period. Krugerrands are also VAT zero rated, and attract no trading fees, ultimately lowering transaction costs, when compared to ETFs which attract brokerage and other transaction fees that effectively impact the base from which the investment compounds over time.

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“For some investors Gold is a sentimental purchase, while for those who are generally skeptical of financial markets, Krugerrands provide a sense of comfort about the safety of their investment and are also easy to use as a gifting product to family or employees for long-term service,” said Razack.

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Customers can purchase Krugerrands quite easily through FNB’s digital channels. 

“We offer clients a guaranteed buyback on the coins purchased through us, making it a relatively safe and liquid investment. Clients can also see the value of their Krugerrand holdings as well as their other investments all in one place,” added Razack.


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