Despite the significant increase in prices, Poles continued to purchase gold enthusiastically in 2024. This trend can be largely attributed to the ongoing conflicts in Ukraine and the Middle East. However, gold is also becoming an increasingly popular source of investment for the future. In the coming year, a further rise in the price of this precious metal is expected, though the volume of sales will depend on macroeconomic factors as well as global political developments. The increase in gold prices will also be influenced by the growing interest of central banks in purchasing this metal. It is worth noting that, so far this year, the most active in this regard has been the National Bank of Poland. Poland already holds nearly 450 tons of gold and is about to join the top 10 countries most engaged in gold investments by central banks.
On the silver market, particularly in Poland, the level of interest among Poles in this precious metal from the beginning of next year remains a major uncertainty. The introduction of the amended Polish VAT Act, which will come into effect in January 2025 and impose a 23% VAT on silver products, could disrupt the current stability of the local market and encourage consumers to purchase silver on the German market, as believed by Adam Stroniawski, Managing Director of Sales at Mennica Skarbowa.
In 2024, several months of record gold prices were observed (the price of gold increased by around 35% year-on-year). Despite this, Mennica Skarbowa had already sold more than 2 tons of gold by the end of September 2024, compared to 1,945 kg in the same period last year, which marks an increase of 6.4%. Products made of this precious metal with low weight, such as 1-ounce bars or bullion coins, remain the most popular among Poles. These items are easy to sell worldwide or exchange for other goods, and coins are an official means of payment. Mennica Skarbowa is certain that it will sell more gold than in the previous year, and the Polish market will also see a slight increase.
Of course, the increase in both sales and popularity of gold purchases was driven by factors such as uncertainty in financial markets, geopolitical risks and threats, as well as the growing reserves of central banks. There is no doubt that the current geopolitical situation will continue to affect the price and demand for gold. Due to the escalation of tensions in the Middle East and the instability surrounding Syria, where political destabilization is ongoing, investors will increasingly choose gold as a safe haven. Additionally, the ongoing lack of resolution to the conflict in Ukraine, which destabilizes the region and generates long-term economic risk, is also driving demand for this precious metal – especially in Central Europe. In these circumstances, gold becomes a natural choice for capital protection when facing global uncertainty and market volatility.
Poland as the “Golden Island” in Europe
Global demand for gold bars and bullion coins reached 859 tons in total for the first three quarters of 2024, a level similar to that of the same period in the past four years. However, it set a new record in terms of value, amounting to 63 billion USD. In the third quarter of this year, the average gold price quoted by LBMA hit another record, rising by 28% year-on-year to 2,474 USD per ounce. The demand for gold bars and bullion coins during this period was 269 tons, which, compared to the relatively strong third quarter of 2023, represented a 9% decrease. Limited gold purchases in China, Turkey, and Europe were the main factors contributing to the year-on-year slowdown. According to the World Gold Council, demand for physical gold in Central and Eastern Europe continued to rise in the third quarter of 2023, although a 19% decline in sales was recorded year-on-year.
In Germany, the largest European gold market, sales of physical gold dropped by as much as 70% year-on-year, indicating a significant weakening of interest in this asset in the West. Poland stands out among other European countries as a “golden island,” where the demand for gold bars and coins remains stable despite global market fluctuations. The stability of the Polish gold market is due to the growing investment awareness among Poles, a preference for safe capital investments in the face of inflation, and geopolitical factors. The ongoing war in Ukraine, along with the presence of a significant number of Ukrainian citizens in Poland making “golden purchases,” further strengthens local demand for gold. Positive sales results in Poland testify to the strength of the domestic market and may signal other countries in the region, pointing to the growing importance of Central and Eastern Europe in the global gold market.
Silver market in question
While the gold market remains steadily in demand, the future of silver investments in Poland is now uncertain. As of January 1, 2025, the amended Polish VAT Act will come into force, replacing the margin VAT with a full 23% VAT on silver products. The new tax will cover platinum and silver bullion and collector coins imported from abroad. For example, a 100g silver bar currently priced at around PLN 530 will cost PLN 610 in Poland next year (assuming the silver price remains unchanged). This change will make investing in silver less profitable for domestic investors. Foreign sellers, particularly in Germany, may benefit from this situation, as the silver market there will remain more competitive. In Poland, however, a decrease in demand for silver can be expected, which, in the longer term, may reduce the liquidity of this market.
In conclusion, the gold market in Poland remains relatively resilient to global fluctuations, making it unique compared to other European countries. On the other hand, the silver market faces challenges due to new tax regulations that may affect its profitability. Investors should incorporate these changes into their strategies while monitoring global trends and local factors.