Why Czechs Consider Gold as the Best Protection Against Inflation

For example, the Czech company Golden Gate increased its sales by almost a quarter year-on-year. Last year, its customers bought three tons of gold and 36.8 tons of silver.

“Given the expected further gradual increase in the prices of precious metals, which most analysts predict for this year, we expect further gradual growth in the demand for precious metals,” Golden Gate client care manager Pavel Řihák told Práv.

As he further pointed out, up to 30 percent of respondents to a recent survey by the Median agency consider investment gold to be one of the suitable products that can help solve the problem of the loss of purchasing power of savings in the long term.

This year alone, the price of gold has risen by 14 percent since January to the current roughly $1,995 per ounce. “This year, we expect a further gradual increase in the price of the yellow metal. Gold and silver are one of the safest investments ever in uncertain economic times. It holds the value of money and has an anti-inflationary effect,” Řihák pointed out.

According to him, the ideal way for a potential interested party is to buy physical metal from a proven trader, preferably with brick-and-mortar branches near the place of residence. “The investor will not lose physical gold, for example, when a financial institution collapses, as can be the case with paper certificates. You can buy the precious metal as a one-off in the form of an ingot or a coin, another option is long-term savings or a commodity account,” advises Řihák.

As he further stated, the main guide should not only be the selling price of the precious metal, but also the guarantee and the conditions under which the merchant will buy the gold back. People should be interested in whether the dealer guarantees to buy back the gold and under what conditions, including how long it will take for them to get their money back.

According to Jakub Petruška, an analyst at Zlaťáky.cz, which also invests in physical gold, Czechs were buying it the year before last mainly with the aim of keeping part of their savings in a storable, portable and internationally recognized form. Now, the reasons for long-term asset protection against inflation clearly prevail.

Some buy gold purely speculatively. “Although it can pay off for people, it often ends up being a rather unpleasant disappointment. Many people who bought gold at the top of the cycle with the vision of quick profits will not last and sell it at a loss, disillusioned. In the long term, gold protects savings from depreciation, but in the short term, this may not be the case,” Petruška warns.

At the beginning of April this year, the price of gold exceeded the psychological threshold of two thousand dollars (almost 43 thousand crowns) per troy ounce (31.1 grams) and rose to the highest value since last March. The weakening of the dollar and the decrease in government bond yields contributed to its price increase. After the subsequent correction, it is holding near the level of 1990 dollars per ounce.