The gold market is experiencing ups and downs, and the price of precious metals is undergoing significant fluctuations. There are also rumors that China has quietly resumed buying gold, though not officially announcing it. Meanwhile, a significant change is expected in the Polish silver market from January. Will Poland experience the same thing Germany did?
At the beginning of last week, we witnessed yet another correction in the gold market, leading to one of the biggest drops in value since 2021 when gold lost 3% in one day.
The price then started to increase again, ending at about 2650 USD/oz last week. The new week began with a slight decrease in value, after which the metal started to recoup losses. On Monday, December 2nd, an ounce was already priced at over $2640 by noon.
New U.S. Treasury Secretary Shakes the Market
The aforementioned correction occurred after Donald Trump announced the new Treasury Secretary, Scott Bessent, who is associated with George Soros, a known opponent of the Republican conservative world view advocating for liberal approaches to not only economics but also cultural and individual freedom.
Bessent, previously a long-time Wall Street worker, is crucial to the gold context due to his support for the “3-3-3” tactic, aiming to reduce the budget deficit to 3% of GDP, accelerate GDP growth to 3%, and increase oil production by 3 million barrels per day. His support for Trump’s agenda has benefited the dollar, causing a correction in gold prices.
Interestingly, Bessent has previously stated he holds substantial gold reserves, indicating a strong belief in the precious metal’s potential.
Impact of Geopolitics and Economics on Gold
Additionally, the U.S has presented a plan for a cease-fire, initially for 60 days, accepted by Israel and Hezbollah, creating a zone in Lebanon free from Israeli and Hezbollah fighters, maintained by the Lebanese army. This cease-fire has led to a reduction in conflicts in the Middle East that positively affects the markets by reducing the temperature of dispute and causing the price of gold to fall. With the rise in U.S inflation and the expected decrease in interest rates, the situation seems nearly optimal for gold prices.
Is China Secretly Buying Gold?
The People’s Bank of China had been buying gold in substantial quantities for 18 months from 2022 to 2023 when the purchasing suddenly stopped, unlike other central banks that continue to buy gold.
However, last week an article by Jan Nieuwenhuijs, a long-term gold market analyst, suggested that China is still accumulating gold unofficially through the Shanghai exchange, causing suspicions of secret gold hoarding.
Silver in Poland Subject to Full VAT Rate
A crucial change is expected in the polish silver market, as it is often purchased as a cheaper alternative to gold. Silver prices usually increase following any rise in gold prices, and silver has experienced significant growth this year.
From January 1, 2025, a bill signed by the president normalizing VAT rates on collectibles will come into effect. Poland, unlike most countries in Europe, had allowed the import and subsequent sale of silver coins from outside the EU as collectibles under a VAT margin. This change aligned with an increase in VAT rate in Germany last year, causing silver coin sales to plummet by 75%, with a similar outcome expected in Poland.
Michał Tekliński, a gold market expert from Grupa Goldenmark, believes that silver will become significantly less attractive as an investment. Therefore, it may be worth considering investing in gold bought in smaller bars or piecemeal, as this investment strategy will likely be much more attractive from a savings point of view starting January 1.
Source: https://managerplus.pl/chiny-potajemnie-kupuja-zloto-i-czy-polski-rynek-srebra-czeka-podobny-los-co-niemiecki-60079
