Gold stockpiles depleted as coronavirus increases demand
Global stockpiles of gold bullion have been severely depleted by the coronavirus outbreak as investors rush to put money into the safe haven assets.
According to the Financial Times, European producers have struggled to keep up with the heightened demand, which is reportedly running at around five times normal levels, due to factories being shuttered across the continent.
Valcambi, Pamp and Argor-Heraeus are all based near the Italian border in Switzerland, where authorities have recently demanded the shutdown of plants.
Two weeks ago gold prices had hit a seven year high due to a rapid influx of investors looking to deposit their money in the assets.
However, the price has now fallen from around $1,700 to $1,530 as investors rush to generate cash as the economic meltdown caused by the outbreak continued.
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The founder and managing director of Birmingham firm Bullion by Post Rob Halliday-Stein told the FT that the situation was unprecedented:
“Basically we’re selling as soon as we get stock on location in secure vaults — but we’re restricted to what we can get hold of. It’s a bit like toilet roll.”
Markus Krall, chief executive of German precious metal specialist Degussa, said the shortage was being driven by the stringent measures governments are implementing in order to suppress the spread of coronavirus:
“We are being creative to find new sources but this is so unpredictable”, Krall said.
JM Bullion, a US-based precious metals retailer, said customer orders would be delayed by 15 days due to the shortage, also introducing a minimum order size.