With $8 billion worth of gold brought to the country last year, Germany sets an annual record of gold consumption.
Both Diwali and wedding season are coming up in India, and many are wondering whether the country will break another record in gold consumption. This year’s Dussehra festival, held on September 30, saw Indian gold imports rise 31% compared to the same month last year.
By the turn of October, India brought in 48 metric tons in the span of a single month, equivalent to $2 billion. And with the largest private gold holdings in the world, estimated at 24,000 tons, there is no question that Indians view gold as the best investment money can buy.
However, in a recent Forbes article, Frank Holmes pointed out that for all their love of gold, Indians still weren’t the world’s biggest investors in the metal in 2016, nor were the similarly-inclined Chinese. That title went to Germany, a country that barely registered on the list before 2008 with a yearly average of 17 tons.
The article states that, with $8 billion worth of gold brought to the country last year, Germany set an annual record of gold consumption, showing that an appetite for gold is a global phenomenon. Germans’ move towards gold started during the financial crisis of 2008, notes Holmes, when the stability of Germany’s banks became questionable and the savings of its people were threatened.
As banks began to charge customers for cash storage and yields on German bonds dropped into negative territory, Germans began to move towards the safety of gold bullion. The move comes naturally, explains Holmes, for a country that went through eight different currencies in the last 100 years and once saw its mark become essentially worthless.
Holmes writes that, like Indians, Germans slowly lost faith in banks and came to view gold as real money. A recent study showed that 42% of Germans trust gold more than paper currency, while 59% believe gold will never lose its value over the long-term.
Holmes believes the faith in gold bullion shown by the German people is echoed by the country’s government. The article notes that after a massive four-year operation, Germany brought back 674 tons of Cold War-era gold from New York and Paris and its central bank now holds the second-largest gold stockpile after the Federal Reserve.
While a jump from 17 tons to 200-some tons in annual gold demand in the span of 10 years is astounding, the WGC believes there is still room for further growth. Holmes doesn’t offer a forecast, but he assures one thing: gold is still seen as an exceptional store of value and trusted more than paper money, and that’s good news for gold investors going forward.