The price of gold rose by 22.7% last year, and most of this increase occurred in about half a year. Uncertainty in the financial sector continues. repo markets with uncertainty continuing, and this is likely to further increase the price of gold this year.
The Federal Reserve has effectively started quantitative easing (currency issuance) the fourth phase with an additional injection of about 500 billion dollars into the economy in the coming months. Traditionally, these monetary injections have significantly raised the price of gold in the following 12 months. The price of gold increased by an average of 42% after the first two rounds of currency issuance, within a year of the start of the measures.
The gold to silver price ratio
The price of silver also rose by 19.2% during 2019. Silver offers interesting investment prospects, now that the gold to silver price ratio is as high as 84.99. Practically, this means that one gram of gold can be exchanged for 84.99 grams of silver. This historical price ratio has averaged 34 for decades. Relative to mining production levels, the price ratio would be 7.7.
The value-added tax liability on silver may be a factor slowing down investment in some areas; Jalonom offers its corporate and community clients a VAT warehouse service that allows VAT-free trading in silver and other precious metals.
Investors are seeking a safe haven.
In Germany, new money laundering laws and regulations have even created queues at gold shops.New regulations limit the upper limit for purchases made without an ID to 2,000 euros, down from the previous 10,000 euros.
Does this explain the queuing phenomenon or do the Germans have a deeper concern about deposit protection in general? Bail-in legislation has been adopted in all European countries, which effectively removes banks' deposit protection in market disruption situations. The same phenomenon has also been seen in the sales of luxury watches, which Kauppalehti recently wrote in its article referring to the actions of central banks. In terms of legislation, a similar development is expected here as the EU harmonizes its operations, and on the other hand, the anti-money laundering law already requires customer identification within certain limits.
The past year has activated many Finnish investors as our clients. Increased investment activity is also reflected in longer delivery times for the smallest bars . We ask our customers to take this into account.
Wishing you a successful investment year 2020!
Best regards,
The Jalonom team
Are you interested in investing in silver, palladium, or platinum? You can now purchase these precious metals from us without value-added tax through our storage service. Ask for more information from our customer service at 09-5127298. The service is currently available only for corporate and community clients.
