Investor confidence in Germany recently jumped to a 21-year high, cheered by an acceleration of the domestic coronavirus vaccine programme and concomitant slowing of the domestic third wave of coronavirus. But while optimism for an economic upturn runs high, it brings with it growing fears of rising prices among inflation-wary German investors.
Google searches for ‘inflation’ in Germany – having been on an upward trend since October last year – surged in February after Eurozone annual headline CPI was reported to have jumped to an 11-month high of 0.9%, since when it has only accelerated.
And with comments from both domestic and European central bankers further fanning the flames of inflation expectations, gold has been very much on investors’ radars. Our Gold Demand Trends data shows that Germans bought more gold bars and coins in 2020 than in any previous year, by some margin. And so far in 2021, they have maintained a pace of investing that far outstrips the historical average, even when compared with the heady levels reached during, and in the aftermath of, the Global Financial Crisis.1
Inflation expectations in Germany reached a 5-year high in March
ZEW monthly indicator of inflation expectations