The Polish gold market in 2024 is unlikely to reach record gold sales, but new records may be set for the price of bullion products. It is becoming increasingly expensive to mine it. In December 2023, gold was trading at its highest price ever, and now costs more than $2020 per ounce. Why and how these factors increase the price of gold, and when we will return to Poland to record bullion sales? In the current economic landscape, where inflationary risks, geopolitical uncertainty and financial market volatility are becoming an inherent element, the question of a possible increase in the price of gold and the demand for gold is of interest to both investors and market observers – analyzes Adam Stroniawski, Managing Director of Sales at Mennica Skarbowa.

In the last 50 years, the price of gold has increased more than 40 times. It should be emphasized that this is not the end of the gold price increase. In the medium term, we expect the price to be higher by about 4%. Why? Well, the costs of gold mining such as wages, energy fees, gasoline, explosives and other materials needed for gold mining are rising dramatically. It’s been a long time since any new significant deposits of this bullion were discovered in the world. Many mines are digging deeper and deeper, which also contributes to higher costs. For years, gold mining has remained at a similar level of about 3,500 tons per year. On average, an open pit mine extracts about 1.5 grams of gold per ton of sifted aggregate, while underground mines extract a little more, with an average of 8 grams per ton. According to some studies, currently discovered deposits will be depleted by 2050. Thus, if no new deposits of aggregate are discovered, we can guess that demand and the price in the long term could increase significantly.

The current geopolitical situation is difficult but is unlikely to have a major impact on the price and demand for gold in Europe, including Poland. Neither should interest rate cuts contribute. Only an escalation of the conflict across our eastern border and an increase in tensions in the Middle East could change this, which, of course, no one would want.

While we anticipate an increase in gold prices, we do not foresee a significant increase in sales. Last year, 40-50% fewer investment products made of this bullion were sold in Poland than in 2022. In Germany, this decline was even higher, at more than 70%. For the first time in several years, it is likely that we will not observe a gold sales record in Poland. However, it is also worth noting that gold investment products have become more popular among Poles than they were, for example, 10 years ago. Currently, it is enough to have a few hundred zlotys to invest in one’s first 1-gram bar. Some people choose gold as a security for a peaceful retirement and systematically accumulate this bullion, which in their case is a social security contribution. In the long term, it is difficult to lose on such an investment.

When analyzing the situation in the gold markets, it is important to remember that any forecast for 2024 is subject to a dose of uncertainty. The dynamically changing environment has already proven to us many times that some situations cannot be predicted, so it is important to remember to rationally diversify your savings portfolio.