Driven by global economic uncertainty and geopolitical events, gold prices are experiencing a meaningful surge, prompting both investment and divestment in markets worldwide. this trend is now playing out in Latvia, where residents are increasingly turning to precious metals – both buying and selling – as a response to the volatile economic climate. The following report examines the factors fueling this demand, the activity within Latvia’s gold and silver market, and expert perspectives on the sustainability of these price increases.
Gold prices have surged to historic highs this year, climbing tens of percentage points in value. While some investors are turning to gold as a safe haven amid global uncertainty, others are capitalizing on the gains – a trend also being observed in Latvia.
The price of gold has risen sharply this year, increasing by around 50% in euro terms. Economists attribute this surge to a confluence of factors impacting global markets.
Geopolitical conflicts, including the war in Ukraine and tensions in the Middle East, are driving increased uncertainty worldwide. Simultaneously, investors are increasingly seeking alternatives to traditional currencies, particularly the U.S. dollar. Central banks are also actively increasing their gold reserves, and declining interest rates are making gold a more attractive asset to hold.
Silver has experienced even more dramatic price increases this year than gold. Its widespread use in manufacturing – including solar panels, computer technology, and electric vehicles – is contributing to the demand.
“There is quite a significant demand, let’s say, from an industrial point of view. At the same time, there are supply issues in some cases,” explained Līva Zorgenfreija, Swedbank’s chief economist in Latvia.
Latvians are Both Buying and Selling Precious Metals
Tavex, a leading investment gold and silver dealer in Latvia, has observed a growing interest from residents in both buying and selling precious metals as prices reach new peaks.
“It’s only logical. If someone bought gold 10 years ago, its price has tripled now, and the person, let’s say, has a home purchase or other expenses. This is an asset that can be quickly sold to obtain funds for their needs. But there isn’t a mass sell-off. If we look at jewelry, then, yes, the volume of purchases has doubled in the last year,” said Jānis Astičs, Head of the Dealing Department at Tavex.
High prices are prompting individuals to sell previously overlooked items, such as old jewelry, Astičs noted:
“There have been cases where a larger purchase, such as a men’s gold chain, has cost over 10,000 euros.”
The rapid increase in precious metal prices raises the question of whether this trend will continue.
Zorgenfreija found it difficult to predict:
“Just as this rise was very rapid, there is also likely a possibility that a fall could occur next year. However, given that uncertainty remains relatively high in relation to both trade and geopolitical challenges in Venezuela, as well as, of course, the war in Ukraine – all of this suggests that this aspect of uncertainty will definitely persist.”
According to Tavex estimates, private individuals in Latvia currently hold approximately 10 tons of gold.
For context, this exceeds Latvia’s state strategic gold reserves – 7.7 tons – which are held in England by more than 2 tons.
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