Gold Hits New Records: Price Nears 2700 USD per Ounce

Gold stealthily sets new records, and investors are rubbing their hands! The price of gold, surpassing another threshold, is approaching 2700 USD per ounce, and the 3000 USD level seems increasingly realistic. In Polish zloty, the precious metal has solidly exceeded a value of over 10 thousand zlotys per ounce. Are these increases merely a preview of further records, or a signal of upcoming changes? Anxiety is rising, but the facts are undeniable. The National Bank of Poland (NBP) definitely has reasons to be pleased as their gold reserves continue to grow. In thepast eight years, it has earned nearly 30 billion zlotys on these investments. However, the real winners are private investors. Their profits, within this time frame, exceeded over 100%! How much longer will this gold streak last?

Tell me, dear gold, what’s inside of you?

Gold has once again broken a historic threshold and is now approaching 2700 USD per ounce. Thus, since the beginning of the year, it has gained almost 30%. This is another record this month, and there have been several within the past year. The latest spikes could be read about in September, August, and July.

These thresholds are being crossed in the shadow of the recent FED decision to lower interest rates and the weakening US dollar (currently 1 USD costs about 3.83 PLN).

While discussing the ongoing gold records, it’s worth noting that we have also solidly crossed the psychological threshold of 10,000 PLN. We now have to pay around 10,200 PLN for gold, which represents an increase in value of over 25% since the beginning of the year. The gold market continues to exhibit its strength, remaining one of the most stable and secure choices for investors seeking capital protection. What profits could have been made from such investments over the past 8 years? – points out Aleksander Pawlak, CEO of Tavex. It is assumed that we should allocate 10 to 20% of our income for investment purposes each month. Given the average earnings in the business sector 8 years ago, in 2016, setting aside 1/5 of the income, around 855 PLN, or about 10,264 PLN for the whole year to purchase investment gold, would have allowed us to accumulate about 2.12 ounces at that time. Even if our resources had not increased since then and we wanted to sell them now, we would receive approximately 21,600 PLN, which is more than 11,300 PLN more than 8 years ago. We would therefore enrich ourselves by over 100% – points out Aleksander Pawlak, CEO of Tavex.

Central banks are also increasingly appreciating the precious metal. According to the latest Central Bank Gold Reserves (CBGR) survey conducted in the first half of 2024, 29% of central banks plan to increase their gold reserves in the next twelve months. This is the highest percentage since the start of this survey in 2018, illustrating how crucial a role gold plays in global financial policy. Our National Bank of Poland also recognises this value. According to recent data, after the latest purchases – exceeding 6 tons of gold – Poland’s precious metal reserves already amount to almost 398 tons. Thus, the proportion of gold in national reserves exceeds 15% – the goal of achieving 20% in the near future is therefore closer than ever.

Golden decisions of NBP

Analyzing the same time frame as for private investors, we see that the strategy adopted by the NBP, aiming to increase gold reserves, has proved to be extremely profitable. After the latest purchases – exceeding 6 tons of gold – Poland’s precious metal reserves already amount to almost 398 tons. Thus, the proportion of gold in national reserves exceeds 15% – the goal of achieving 20% in the near future is therefore closer than ever.

If we add up all the results of individual purchases or sales, since 2016, we have over 28 billion zlotys in the plus. If we add to this the whole history, reaching back to 1998, the profit generated from owning gold amounts to almost 58 billion zlotys. The largest contributors to this sum were the 28 tons owned in early 1998 and the June purchase of over 74 tons. It is worth noting that the price of an ounce was then just over 1000 PLN, nearly 10 times less than the current price – Tomasz Gessner, Tavex’s Chief Analyst, totals up. Why is the NBP so eager to buy gold? Increasing its reserves strengthens Poland’s financial stability. In case of serious turmoil in the financial system, like a rapid depreciation of the zloty or overall questioning of the credibility of fiat currencies, a risk-free hard asset in the form of gold is a crucial element in risk management. The increasingly complicated geopolitical and economic situation makes gold reserve management a key element of central bank strategies worldwide – he concludes.