Gold has long been a popular investment in Germany, but the declining trend in recent years has raised questions about German investors' attitudes towards gold. Although recent statistics show a significant drop in gold demand, it is still considered a strategic part of the investment portfolio and a symbol of stability.
Germany has long been one of the largest gold markets in the world, but its investment behavior has undergone significant changes in recent years. In 2022, Germany's net demand for bars and coins was 185 tons, but in 2023, the figure sharply fell to 47 tons. During the first half of 2024, gold demand was only 5 tons. However, this alone does not indicate a waning interest, as demand is measured as a net value that balances purchases and sales. The German market has been challenged in recent years by inflation and the energy crisis, which have affected household purchasing power.
Although the initial impression suggests a collapse, the situation is not straightforward. Gold demand is measured as a net value, meaning new purchases and sales of existing holdings are balanced against each other. This measurement does not reveal how many still consider gold a part of their investment portfolio, nor does it explain why gold is being bought or sold less. A more detailed study by the World Gold Council of 3,000 investors also sheds light on the underlying reasons. From the beginning of 2023, 18% of those who sold gold did so due to rising living costs, and 24% to free up funds for major purchases. (WGC, 2024) Therefore, the decline reflects more economic pressures than a permanent decrease in interest in gold.
Senior Market AnalystLouise Streetconfirmsin the World Gold Council blog, that this decline does not reflect a decrease in German interest in gold. Rather, it speaks to economic pressures, inflation, and the energy crisis, which have affected investors' ability to increase their gold investments. "German investors have historically valued gold for its stability and safe-haven qualities. The recent decline in purchase volumes is due more to temporary economic challenges than a permanent change in investor attitudes," Street says.
Historical perspective
In Germany, the popularity of gold is based on a long history. The Goldmark currency system of the 19th century established gold's position, and in the 20th century, wartime and hyperinflation reinforced its value as a safe haven. After World War II, gold investing remained a key part of wealth protection.
In recent decades, significant increases in gold demand have been driven by the eurozone debt crisis and the COVID-19 pandemic, during which central banks' accommodative monetary policies and economic uncertainty increased the appeal of physical gold.
Record demand occurred in 2021, when the demand for gold bars and coins reached 200 tons, one of the highest levels globally. This was due to rising inflation and ongoing uncertainty from the pandemic.
The typical German conservatism and long-term thinking are also reflected in investment strategies. Gold is seen as a safe choice, just as the famous German sayings "Sicherheit vor allem" (safety above all) and "Gut Ding will Weile haben" (good things take time) reflect an attitude of valuing stability.
Gold is a strategic part of the investment portfolio
So why does gold attract German investors? The most common reasons are the same as elsewhere: inflation protection, ease of trading, and long-term returns. Additionally, gold helps diversify an investment portfolio, reinforcing its role as a strategic asset.
High living costs have forced many investors to sell gold to free up funds for essential expenses. Nevertheless, gold remains a long-term investment strategy for Germans. "More than a quarter of German investors own gold, making it the third most popular investment form after stocks and savings accounts," Street says.
In Germany, gold is still considered a safe and attractive investment. According to the results, 37% of German investors have invested in gold at some point, and 28% currently own gold. Gold is the third most common investment in Germany, right after savings accounts and stocks.
Interest in gold has increased elsewhere
In the United States, investing in gold has increased significantly, especially as inflation accelerates and central banks tighten monetary policy. In 2023, U.S. investors significantly increased their investments in gold, reflecting a growing global interest in gold ETFs and the physical gold market.
In the Nordic countries, investing in gold is still more marginal than in Germany or the United States, but in recent years, purchases of physical gold have increased. Especially during times of crisis, gold has been seen as a reliable store of value. Finland traditionally invests inphysical precious metals, while Sweden and Norway, for example, invest in ETFs and mutual fund shares.
Loog into the future: towards Germany's new golden age?
Although Germany's economic outlook has weakened, gold has not lost its luster. Geopolitical uncertainty and falling interest rates may create new interest in gold as a stable and diversifying investment. According to a World Gold Council survey, only 5% of respondents indicated they do not plan to invest in gold in the future, while 32% said they are likely to buy gold again.
Street emphasizes that "gold is and remains a symbol of stability that attracts investors regardless of short-term fluctuations." He adds that future trends may reflect a new interest in gold, especially as economic uncertainty fades and energy markets stabilize.
