South Africans are all-in on investing in gold – This is why
Excerpt: The recent surge in the gold price has led to a huge increase in demand for Krugerrands in South Africa.
After starting the year at $1,994 per ounce, gold has soared to above $2,700 per ounce as of October 2024. This increase of over 30% looks set to be the biggest annual gold price increase in 14 years.
Given global economic tensions like the Russia-Ukraine war, the Middle-East war, and the US national elections, gold’s rise can partially be attributed to an increased appetite for a safe haven investment opportunity.
However, there are other factors impacting the gold price, too – such as strong demand for gold in China.
The People’s Bank of China has acquired 225 tonnes of gold in 2024 – the largest annual increase in gold ownership in its history.
Additionally, many central banks have relaxed their monetary policies which has led to a lower cost of holding assets like gold.
Demand in South Africa
In South Africa, the surge in the price of gold has resulted in a big increase in demand for Krugerrands – one of the world’s most iconic gold coins.
“Krugerrands are highly liquid in the South African market, making them a preferred choice among seasoned investors and collectors alike,” said Sebastian Pillay, Head of Share Investing at FNB Wealth and Investment, on BusinessTech.
“[They] are considered legal tender in South Africa, but their real value lies in their gold content.”
The increased appeal of gold as a safe-haven asset in South Africa is reiterated by Rael Demby, CEO of The South African Gold Coin Exchange and the Scoin Shop.
“We are seeing a significant demand increase for Krugerrands and other gold coins,” said Demby.
“The trend reflects a growing recognition among South Africans of the need to hedge against currency volatility and inflation.”
Short-term vs long-term
Demby went on to emphasize that gold is much more than a commodity – it is a store of value that transcends economic cycles.
While the meteoric rise of gold in 2024 has been accelerated by short-term and medium-term global events, the long-term investment opportunity is equally valuable.
Investing in shares and bonds is not only betting on short-term growth or decline – it comes with the risk that the company you invest in, or financial organisation you invest with, can collapse altogether.
In contrast, gold will never cease to exist as a store of value – making it the ultimate safe haven asset.
"Gold has always been a hedge against inflation and economic turmoil,” said Demby.
“Given the current global signs, it's not just a safety net anymore - it's a necessity."
Gold and silver
To mitigate short-term market fluctuations, investors are encouraged to always have a percentage of their portfolio in gold. It is also advisable to diversify you precious metal portfolio with silver.
The value of these precious metals generally does not correlate with assets like stocks and bonds, making them critical for diversifying your investment portfolio.
By holding both silver and gold, you further diversify your portfolio by pitting the fluctuations of the two metals against each other.
Scoin Shop is the best place to buy Krugerrands, other gold coins, and silver coins in South Africa.