According to a World Gold Council report, global demand for gold bars and investment coins fell by 5% year-on-year in the second quarter of this year, reaching 261 tons. In China, the world’s largest gold market, demand increased by as much as 62% y/y (reaching 80 tons), while India recorded a y/y increase of 46%. In Europe, gold demand was significantly weaker, reaching only 11 tons, a 65% y/y decrease. In Central and Eastern Europe, investment gold sales in Q2 declined by 26% y/y. Despite the difficult situation on European markets, Mennica Skarbowa, Poland’s largest dealer of investment gold, reports record sales – each month results in increases. The Company – compared to the second quarter of last year – gains revenue growth of 9.5%. The Company’s Management Board looks optimistically at the second half of the year, noting the interest in the royal bullion on the Polish market. Investors are eagerly reaching for gold as a safe haven in the face of global economic and geopolitical challenges such as the war in Ukraine or the escalation of the conflict in the Middle East, which affect the price of bullion.
Analysis published by the World Gold Council shows that global demand for gold bars and investment coins fell by 5% year-on-year in the second quarter of this year, reaching 261 tons. But interestingly, two distinct trends were noted within this market segment. Purchases of gold bars increased by 12% y-o-y to reach 184 tons – the best second quarter performance since 2013. Meanwhile, demand for gold coins fell by as much as 38% reaching 53 tons, the worst result since 2020.
Why is this data so different? The World Gold Council explains the difference by a decline in demand for physical investment gold in Western markets, where coins are far more popular than bars. Meanwhile, in Asia, where consumers prefer bars, there has been a significant increase in demand. In China, the world’s largest gold market, demand increased by as much as 62% y/y (reaching 80 tons), while India saw a 46% y/y increase. Demand for physical investment gold in the US was a strong 18 tons for this market, but due to the comparison with a very strong Q2 2023, it was as much as 48% lower. In Europe, gold demand was significantly lower, reaching only 11 tons, down 65% y/y. On the Old Continent, it was the weakest second quarter since 2008, i.e. even before the outbreak of the global financial crisis. German-speaking countries were responsible for most of the decline, and Germany itself even recorded negative investment demand, meaning that customers sold more gold than they bought.
The gold market in Poland
The sector described by the World Gold Council as ‘other Europe’ (excluding major markets), which also includes Poland, recorded a quarterly result of 5.5 tons, 26% lower than a year earlier, but equivalent to half the net demand for the entire Old Continent.
– Despite the global market turmoil, Poland has seen a steady increase in interest in purchasing gold. While demand declines have been significant in some European countries, our market remains one of the most resilient. In the second quarter of this year, we witnessed marked price increases resulting from, among other things, uncertainty in the markets, the ongoing war in Ukraine and the escalation of the conflict in the Middle East. At the beginning of the quarter, gold prices in PLN rebounded from a level of around PLN 8,900 per ounce, reaching almost PLN 9,800 in mid-April, after which they stabilized around PLN 9,300-9,400 per ounce. The price growth contributed to increased demand for gold in Poland, but also to increased supply, especially when the price of bullion approached the psychological barrier of PLN 10,000 per ounce – comments Jarosław Żołędowski, President of the Management Board of Mennica Skarbowa and adds: – Gold sales at Mennica Skarbowa are delivering increases every month. In the second quarter of 2024, sales were 9.5% higher than in the same period last year. On a half-year basis, revenues were 6.5% higher than last year. These figures show that Polish investors appreciate gold as a safe haven, especially in the face of global economic and geopolitical challenges.
Despite the difficult market situation, Mennica Skarbowa generated revenue of PLN 202.8 million in the second quarter of 2024, 9.5% more than in the second quarter of 2023. Sales profit in the second quarter of 2024 reached PLN 4.2 million compared to a loss of PLN 1.9 million in the same period of 2023. The increase was mainly due to a higher gross margin on sales, which was 5.65% in the second quarter of 2024, compared to 2.48% in the second quarter of 2023.
Mennica Skarbowa has consistently pursued its growth strategy by engaging in various image and marketing activities. Through sponsorship of cultural and sporting events, participation in industry conferences and cooperation with influencers and well-known personalities in the past quarter, the Company built its recognition and strengthened its position as a leader in the alternative investment market.