Australians are queuing for up to four hours to snag even a small piece of gold as prices hit record highs. Driven by various overseas factors in recent weeks, the gold rush has seen many trying to get in on the action before prices climb even further.
ABC Bullion, a leading precious metals and bullion provider in Australasia, has seen lines at its Sydney store stretching out the door and around the corner in recent weeks. ABC Bullion general manager Jordan Eliseo told Yahoo Finance he's witnessing a “frenzy” as people line up day after day.
“It’s not uncommon to see queues outside our branches occasionally, but to see this sustained for weeks on end, and people lining up before we’ve even opened… is a new and unprecedented phenomenon,” he said, adding, “It has to be pointed out that the physical queues are in many ways the tip of the iceberg. The ‘digital queues’ to open accounts online, and the level of online client activity we’re seeing, are in some ways an even greater increase than the people buying in store.”
He confirmed people are waiting up to four hours to get into the store to purchase gold. This is due to high security measures at its Sydney branch and other ABC Bullion retail locations across Australia, as well as the desire to provide a good shopping experience for buyers.
Once inside, people can purchase a variety of gold and silver products: from small 1-gram gold blocks to the iconic 400-ounce gold bars – worth over $2.67 million AUD each.
Commonwealth Bank commodity strategist Vivek Dhar said the rise in gold prices this year has been “remarkable.” “But it’s worth noting other precious metal prices are also rallying. Palladium prices are up 75% year-to-date and platinum prices are up an even more impressive 87%,” he said.
“One key driver has been the shift in monetary policy, making precious metals a more attractive alternative to bonds and the US dollar. But the real catalyst was Trump’s ‘Liberation Day’ tariffs – which triggered a significant sell-off in equities, pushing investors into precious metals as a safe haven.”
These tariffs triggered volatility in global markets, and investors subsequently rushed into the gold market because it is viewed as a safe asset. And this is good news for Australia.
“As the world’s third-largest gold producer and holding one of the world’s largest gold reserves, the Australian economy is expected to benefit from the recent rally in gold prices,” a Commonwealth Bank investor report released on Tuesday stated.
“We expect the lift in gold prices to flow through to the Australian economy via two channels: higher national income and higher investment.”
Justin Lin, a gold expert at Global X, one of Australia’s largest gold fund managers, told Yahoo Finance he was shocked to see so many people lining up outside retail gold stores to buy physical gold.
He pointed out that “ETFs are by far the easiest, and probably the best way to get exposure to physical gold, because it doesn’t involve huge bid-ask spreads. By comparison, if you go to a physical gold retailer, they’re going to charge you a straight 10% premium.” In addition, when purchasing physical gold, prices are usually marked up with a 2% to 10% premium above the spot price.
Eliseo said ETFs are a good entry point to buying gold, but they aren’t for everyone. “For a lot of people, myself included, they put a lot more value on the physical attribute of bullion. And when it comes to ETFs, people think about there being 50-page product disclosure statements to read, and the need to open a brokerage account, as well as other complications. There’s room for both, and I think the most important thing is that people are getting exposure to gold.”
Financial advisor Hamish Landreth told Yahoo Finance that buying gold to diversify an investment isn’t a bad thing, but going “all in” could lead to bad outcomes.
He said, “The reminder here is not to blindly follow the herd, stick to tried and tested principles of diversification, and don’t get caught up in the current frenzy. If people are piling into gold now to hedge against future volatility, then it could be argued that this expectation is already priced in. The risk is that if the global economy isn’t as impacted as the media might be predicting, then investors may sell off gold, putting downward pressure on prices.”
Disclaimer: This article is for informational purposes only and is not investment advice. Always consult with a qualified financial advisor before making any investment decisions. Understand the risks involved in gold investment, including price volatility influenced by global events and market sentiment.
Beyond physical gold and ETFs, consider other options like gold mining stocks. These stocks can offer leverage to gold prices, but also carry company-specific risks. Diversifying your gold exposure across different investment vehicles can help mitigate risk.
Keep an eye on factors that influence gold prices, such as interest rates, inflation, geopolitical events, and currency fluctuations. Understanding these factors can help you make informed decisions about when to buy or sell gold.
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