To say that the global financial crisis had a seismic effect on markets is almost a truism. But the events of 2008 reshaped investor behaviour too, not least in Germany.

As a nation which values long-term wealth preservation, Germany has a long tradition of gold investment. Around the turn of the century however, German investors discovered a new-found fascination for equities and interest in gold waned. Banks, historic distributors of physical assets, closed down or minimised their gold desks and investment demand fell to generational lows.

The financial crisis transformed that mindset, reminding German investors of the properties that had attracted them to gold in the past – its resilience in the face of disaster; its lack of correlation with other assets; its immunity from credit risk; and above all, its reliability as a wealth generation tool.

Since that time, the German gold market has gone from strength to strength, boosted by a rich ecosphere that facilitates gold investment online, in stores, at banks and via ETFs.

In this edition of Gold Investor, we explore Germany’s relationship with gold, showcasing that, when conditions are right, a gold market can experience rapid development, to the benefit of stakeholders across the value chain.

Bundesbank Executive Director Carl-Ludwig Thiele explains why the central bank favours gold and the rationale behind bringing its store of gold back to Germany.

Wolfgang Wrzesniok-Roßbach, Chief Executive of Germany’s largest gold retailer, Degussa, discusses the group’s phenomenal growth story – from a dormant brand to a household favourite in just seven years. And Robert Hartmann, founder of leading online platform Pro Aurum, reveals how and why he built the business from nothing to a leading distributor of gold in Germany, Austria and the German-speaking region of Switzerland.

Major online platform BullionVault compares the behaviour of German investors with those from other nations – unveiling some intriguing traits about German purchasing habits in recent years. And we discuss the outlook for gold investment in Germany.

Further afield, Manu Bhaskaran from the Centennial Group, looks back at the Asian Financial Crisis of 1997, analyses changes to the region since then and assesses the contribution that gold could make to Asian central bank reserves today.

And Zhiyan (David) Xu of HuaAn Funds discusses the significant potential of the Chinese ETF market four years after ETFs were officially launched in China.

Looking ahead to 2018, there are good reasons to be optimistic about gold’s performance. US interest rates may be rising but a lot is priced into the curve already and the direction of the dollar remains uncertain. Meanwhile, the long bull market in equities raises serious questions about prospects for stock prices.

The outlook for demand is relatively benign too, as China and India, the two largest markets for gold, are expected to deliver robust economic growth next year. Our Chief Market Strategist, John Reade analyses these factors.

We are keen to hear your views about Gold Investor so please email [email protected]. We hope you enjoy the read.

Aram Shishmanian

Aram Shishmanian

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