Gold is known as an asset of refuge in the face of various risks. Whether we are talking about inflationary risks, declining interest, seizures or economic recessions or harmful geopolitical events, investors – both the big ones and especially the little ones – choose to protect their wealth with gold.
Gold is known as an asset of refuge in the face of various risks. Photo archive
The reasons for such a decision are rather cultural. When we think about stability in investments, most likely gold is the image we design instantly, say experts in the gold market.
Experts, however, warn that not every event leads to a gold chase. “There is a differentiation between the impact that certain events have on the price of gold and the non -existent impact on other events. Thus, we can categorize them as economic events and geopolitical events. Through economic events we mean any news or tendency that has a direct impact on the real economy. We are talking about inflation, interest rates, unemployment, bankruptcy, debt, deficit, commercial wars, etc. Geopolitical events include armed conflicts, diplomatic tensions or modification of political currents (a sudden change in the electoral preferences of a people). The price of gold tends to increase when both economic and geopolitical events are bad. And has a decrease tendency when these events disappear or reduce in intensity ”is shown in an analysis by Tavex Romania.
The gold demand increases during the war time
In the case of Romania, the trends are similar. In March 2022, one month after Russia invaded Ukraine, an increase of almost 25% in the amount of gold sold compared to February 2022. In October 2023, when Hamas attacked Israel, the growth in the gold demand was 47% in the same time.
Definitely, Romanian investors are in a significant proportion attention to global trends and adjust their portfolios according to various events, whether economic or geopolitical.
Regarding the preferences of investment products during periods of geopolitical voltage, there is a tendency to suddenly allocate assets to gold. This allocation is done by purchasing products with higher weights (50 or even 100 grams), although the high interest is kept at the level of the entire weight spectrum. If we are to dispel between the bullion and the gold coins, the ingots are the most common option, these being delivered in packaging that represent the authenticity certificate of each ingot. In the case of coins, there are no such certificates, which, for the uninitiated, can raise question marks on the origins of the products.
Gold Investment Coins have no series number
However, it should be noted that the golden investment currencies do not have a series number, which is why no certificates can be issued for them. Moreover, any authenticity document must be issued strictly by the manufacturer, as traders do not have the authority to issue any certificates.
There are differences in the time required for the price of gold to respond to the two types of events. In the case of economic events, the answer is almost instant. While, in the case of geopolitical events, the answer is slower.
The reason is that institutional investors do not have the certainty regarding how much impact will have and on what time interval the geopolitical event will take place. As they can be short -lived (for only a few days), there is no reason why the investment funds are restructured by liquidating certain positions and replacing them with gold.
Thus, institutional investors prefer to wait a certain period of time to see if that conflict will expand – either by involving several parts or in a longer term. If the prospects are to worsen the situation, then the efforts are needed to restructure the assets portfolios.
The instant impact of economic events, however, is due to the fact that they have an instant influence on the real economy. An increase in inflation rate is already in the economy. A reduction in interest occurs overnight. High unemployment is also part of the economy. For this reason, investors will be constantly with their eyes on the news related to the macroeconomic evolution of the countries in which they either invest or plan to do so.
When the prospects of economic growth worsen, they act almost instantly. In such situations, the price of gold tends to increase.
Where can you buy gold, physical or online
To buy or invest in gold, those interested have two methods available: either they buy physical gold, or in the form of trading financial instruments, ie from the stock exchange.
Those who want to buy online have several variants: either from the Bucharest Stock Exchange, with the help of Romanian brokers; either by buying an ETF (Exchange Traded Fund) based on the investment in physical gold, from the brokers acting on the external scholarships; either by buying a CFD (contract without difference) also from brokers.
“Among the advantages of gold buying in this form are: increased liquidity because you can sell at any time, low acquisition costs because no transport or storage costs are included and the fact that the price of gold will be very similar to the real one, ie the one set by the BNR course,” Magnor representatives explained.
Those who want to buy gold in physical form have several sources: either from the NBR, which can be kept in the bank's safe; either from specialty stores; either from a pawn house that offers gold pawn services.
What do you need to know about the process of buying gold
Those who want to buy gold in physical form should know a few details, including technicals, about:
Title, that is, the proportion of precious metal contained in an object, a proportion that will be expressed in thousands. In Romania only the following titles are legal: 375 ‰; 500 ‰; 585 ‰; 750 ‰; 833 ‰; 900 ‰; 916 ‰ and fine gold 999 ‰;
The brand, that is, the sign that is applied to objects of precious metals/jewelry. There are three types of brands. Those of certification, applied by the National Authority for Consumer Protection, those of own guarantee, applied by the domestic producer, importer or seller and the title mark, depending on the title of the metal.
In order to fulfill the legal conditions for sale, the gold must be marked either with the certification brand, or with the one of its own guarantee and the title mark.
