Explain to us how the price of gold is calculated…
Gold is a global market, its price is the same everywhere on the planet. The price of the ounce, which corresponds to 31.10 grams, is fixed in dollars, in London, then transposed into the different currencies. People are mainly interested in the price of the bar or the Napoleon more than that of the ounce. The relationship between supply and demand then causes the price to change. The amount of gold produced is not infinite. Moreover, the entire amount extracted since creation would fit under the Eiffel Tower. The offer is therefore limited. For demand, we distinguish between central banks and individuals. Among the latter, there are two types: the wealthy from the Gulf countries, China or India. Countries where the geopolitical environment is unstable, which do not trust banks and markets. They buy physical gold, which must be able to be stored. For others, it is a way to invest, to diversify your investment portfolio. They buy ETFs (1), trackers: these are types of funds that follow the price of gold. So investors don’t have to worry about storage. This is a fairly recent phenomenon, 5 or 10 years old. This simplification of the purchase of gold explains the increase in demand.
Why do we say that gold is a safe haven?
Because gold is an asset that has intrinsic value, unlike Bitcoin, for example, which is worth nothing in theory. Gold earns nothing, has no yield and must be stored, which costs money. But gold is anonymous. People who don’t have confidence tell themselves that if the state wants to tax them or if there is a war, they can take their gold and leave. They will always have a way to get something from it. Whereas with a currency that is no longer worth anything, like the Lebanese pound whose price has collapsed, you lose everything.
What advice would you give to individuals who want to sell their gold?
First of all, not to sell to itinerant buyers who pass through towns and villages. You have to go to well-established brands, with professionals who are obliged to make an offer before there is a transaction. We can therefore easily compare. When selling jewelry, it is better to go to jewelers because the jewelry can be worth more than gold by weight. And for coins, you have to target numismatists.
(1) ETF : Exchange Traded Funds
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