Deutsche Boerse (ETR:DB1) says Germans continue to invest heavily in gold, with holdings of its gold-backed security reaching a new all-time high in 2017.
The German marketplace exchange organizer said Wednesday (January 3) that the holdings of Xetra-Gold reached an all-time high of 175.04 tons of gold at the end of 2017, up significantly from 117.59 tons at the end of 2016.
What’s more, out of all commodities traded on the Xetra Stock Exchange, Xetra-Gold was the highest-performing security with order book turnover around 2.86 billion euros in 2017. Xetra-Gold has been around for a decade, having first been introduced in 2007, and last year the gold price ended up about 13 percent.
“The increase is mainly due to the high demand from institutional investors” said Deutsche Boerse Managing Director Michael König. “However, more and more asset managers, family offices and private investors are showing interest in gold as an asset class.”
For each unit certificate, 1 gram of gold is deposited in the central safe deposit for German securities in Frankfurt. According to Deutsche Boerse, the assets under Xetra-Gold’s management currently amount to 6.1 billion euros (US$7.3 billion). “With more than 175 tons in inventory, Xetra-Gold is now the leading physical gold deposit in Europe,” said König.
The German public and gold
A report released last year by the World Gold Council (WGC) notes that Germany’s gold investment market has “boomed” in the last 10 years. The WGC explains that concerned investors turned to gold to protect their wealth in the face of “successive financial crisis and loose monetary policy.”
Overall, German investors bought more gold per person in 2016 than investors in China and India, two other countries known for being gold powerhouses.
The WGC surveyed German investors in 2016 and discovered that 25 percent said they bought gold as part of a regular review of their investments, while 23 percent said it was part of their retirement planning.
Earlier this year, Germany’s central bank completed the transfer of US$27.9 billion worth of gold bars held by France’s central bank and the Federal Reserve in New York. Germany stored the gold abroad fearing it could fall under Soviet control during the Cold War, but times have changed.
The 53,780 bars were brought back to Frankfurt three years ahead of schedule in a move intended to build public “trust and confidence.” Bundesbank’s Executive Board Member Carl-Ludwig Thiele added that the gold reserves give the country the “ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.”
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.