Interest in physical gold is soaring, and dealers have been reaping the rewards

With the war in Ukraine and high inflation, more people are trying to protect their finances from devaluation. In this effort, they are turning to invest in physical gold as a guarantee of safety. This is also being observed by Czech sellers of gold bars, bullion, or coins, whose sales have increased significantly since the start of the war.

“After the outbreak of the war in Ukraine, we saw an increase in interest in buying gold, as did other competitors. Demand greatly exceeded supply. Both gold and silver were sold out a lot, but we kept a relatively large inventory, which paid off in this case,” Martin Štich, CEO of online retailer Zlatá, said.

The store had around CZK 1.9 billion turnover last year, roughly CZK 300 million more than the year before. This year, the turnover so far is 1.1 billion.

The Czech Mint has also recorded a significant increase in sales, according to which the interest of Czech traders in gold bars or coins has increased to such an extent that foundries in Switzerland could not keep up in the spring, and customers were waiting in line for several weeks.

“In the first and second quarters, the Mint’s sales increased by roughly 30 percent,” Lenka Klimentová, spokeswoman for the Czech Mint, told Novosti.

Among investors, gold has always retained a reputation as a haven in times of financial crisis, a fact confirmed by the current war based on increased sales. The yellow metal has another advantage: investment in it is not subject to VAT.

Slightly increased demand for gold investment is also recorded by the online investment platform Portu.

Its founder Radim Krejčí said the volume of gold purchases in the second quarter of this year rose by six percent compared to the volumes at the end of last year.

“From a general perspective, gold belongs in a diversified portfolio, but it should not be significantly overweighted compared to other asset classes. We include it in our conservative portfolios in the framework of units of percentages, “Krejčí explained.

Be careful who you buy from

But in the context of buying physical gold, potential investors should be wary of who they are buying from.

“Beware of the unbeatable deals that dealers often offer. If the price is meager compared to similar products, something is wrong. No dealer will knowingly sell their products at a loss,” warned Jaroslav Černý, head of marketing at the Czech Mint.

According to Krejčí, people should also be cautious and pay attention to the difference between the purchase and sale price.

“In Czech practice, it is common for this difference to reach up to 30 percent. Anyone who purchases such an ingot is effectively 30 percent in the red. Therefore, I would always recommend asking at what price a given trader is willing to buy physical gold or other metal from me to get an idea of how much he will lose by acknowledging it, “he recommended.