Gold prices soar and portfolio shifts
2024 saw a remarkable growth in gold prices, about 25% since the beginning of the year, creating a fever in the precious metals market. This heat was so great that even large retail chains such as Costco (USA) had to impose a limit on the number of gold bars that each customer could buy per day.
According to a survey by HSBC bank, the proportion of gold in the investment portfolios of wealthy investors has doubled, from 5% to 11%.
Experts say that uncertainties about trade wars, geopolitics and inflation are pushing gold to the position of a "safe haven", attracting strong cash flows from those who want to preserve asset value.
“Gold is a good friend in times of uncertainty,” said James Steel, precious metals analyst at HSBC.
Rich people invest in gold: From owning paper gold to owning physical gold
The wealthy are approaching gold in many different ways, not just stopping at traditional investment channels. Some investors choose physical gold (gold bars, gold ingots) but do not hold it directly, but deposit it in specialized storage vaults.
JP Morgan, for example, offers paper gold investments, meaning that the buyer does not own a specific gold bar but holds the corresponding value, with a minimum investment of $250,000 (much lower than buying a 400-ounce bar worth about $1 million). This saves on storage and insurance costs compared to owning each individual gold bar.
However, for the extremely wealthy and those who tend to be skeptical about the economic future, they still prefer the more expensive option: owning physical gold, being able to hold it, and even requesting it to be delivered to their hands.
There was a case of a female customer who even declared that she would bury the gold in her garden, something that banking experts always advise against doing because of the risk of theft and difficulty in reselling.
For clients who require absolute confidentiality, a physical inspection of the vault is essential. However, only those with gold worth around $100 million or more can be granted special access to JP Morgan's vault in London.
Old military bunkers: Ideal destination for gold for the super rich
In order to ensure absolute safety for their huge assets, some companies have provided gold storage services in former military vaults. Typically, Swiss Gold Safe in Switzerland, where two storage vaults are located deep in the Alps, are considered a symbol of safety and neutrality.
Many investors also choose a "multinational" strategy, which means distributing gold in many different countries such as Switzerland, Singapore, and even organizing their own audits of the amount of gold stored.
Mr. Ludwig Karl, CEO of Swiss Gold Safe, said that most of their customers come from developed countries but lack confidence in the banking system or government, so they want to keep part of their assets in the form of precious metals in a neutral and safe place.
Potential for gold price increase
Although gold prices have had a strong rally, many experts still believe that the current level of geopolitical concerns and economic instability is not high enough to stimulate a wave of crazy gold investment like in previous global crisis periods.
"For the world to see more money flowing into gold, it needs to face greater risks," said HSBC expert James Steel. He believes that only when the global uncertainty index reaches extremely high levels will gold truly explode and realize its potential as the ultimate safe haven asset.
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