Expert interview with Zhenwei Wang from Auvesta Edelmetalle AG
How secure is the supply of gold and silver at Auvesta?
We have been asked this question every day since the outbreak of the Ukraine crisis. Concerned gold buyers are realizing that a large part of the precious metal range is out of stock in many online gold shops.
Dear Mr. Wang, Thank you for taking the time for an interview. Please introduce the company Auvesta Edelmetalle AG to us.
Greetings Mr Hausler. I would like to briefly introduce our company. Auvesta was founded in 2009. We are an international company with customers in more than 120 countries. We offer our customers the opportunity to purchase physical precious metals from us and to store them through us. Both the order and the purchase can be made online. A depot is available to the customer, through which he can also carry out online sales or arrange for deliveries of his precious metal.
Interesting.
Mr. Wang, we have had a global issue since the end of February 2022. This is the Ukraine crisis. From the point of view of a precious metals trader, can you say: what has changed for you since the Ukraine crisis at the end of February 2022?
We too have customers and business partners in the areas affected by this conflict.
We, therefore, get a lot of information first-hand. We have very deep sympathy for the people affected by this situation.
And in the precious metals sector: we have never experienced anything like this! Not even two years ago, during the 1st Corona lockdown, we had such a high demand for physical precious metals, gold bars, and silver bars, as well as coins.
Are there any developments in customer behavior that are currently noticeable as a result of the Ukraine crisis?
Long-standing customers are increasingly making massive precious metal purchases.
At the same time, the number of new customers who open a custody account with us and use it to purchase precious metals has risen massively. On the one hand, this is arguably done against the backdrop of a reduction in cash and savings and, on the other hand, by reductions in various assets such as mutual funds and stocks.
We generally recommend clients not act out of panic, but always think long-term and invest strategically.
But still, the demand is unbelievable. We have storage locations in Germany, for example in Frankfurt and in Munich. We also have deposits in Switzerland, Singapore, and the UK, among others.
Many customers wish to move from their previous deposit to Switzerland. We offer this relocation to our customers, of course, it is not free of charge. Relocation requires a considerable logistical effort, which also causes costs. Of course, that has to be paid for. But yes, we offer that for every customer who wants it.
In the first few weeks after the start of the Ukraine crisis, many German-speaking online gold shops were already sold out and no longer had any goods in stock. What is the current supply situation at Auvesta?
Our clients purchase physical bullion on standard bars in fractional ownership. In the case of deliveries, the fractional ownership is transferred back to Auvesta and the customer receives his precious metal in the desired denomination. In order to be able to do this at short notice, I don't mean within 2 or 3 weeks, but within 3-5 working days, we always keep sufficient quantities of all denominations in stock. I remember two years ago in March 2020 when the first corona lockdown began. As far as I know, Auvesta was one of the few, maybe the only gold dealer, and not only within Germany, but in the entire D-A-CH area, who could always deliver, who always had enough physical goods in stock.
I'm from China and I was in China at the time. I had just managed to get to Germany on one of the last flights before air traffic was significantly restricted due to Corona.
I saw the potential of this virus, this pandemic, coming. My colleagues and I then made the decision together: “We have to massively stock up on small bars! These standard denominations that many private investors like to have in their homes.”
In addition to the extensive inventory that is always available, we have massively increased our warehouses weeks before the first lockdown in 2020.
This enabled us to reliably deliver physical precious metal to our customers in the desired denomination.
Scheide institutions have also learned something new as a result of the Corona crisis. Overall, they are much better prepared for high demand today than they were two years ago.
Nevertheless, many retailers are currently experiencing massive delivery delays and I have also seen in many online shops that coins and bars are no longer available.
As I already explained, based on our experiences during Corona, we are very well prepared for high demand. In November and December 2021, we had already massively increased the portfolio, especially in small denominations.
We don't have any delivery problems and of course, we keep ordering so that it stays that way. We are very confident that this time too we can deliver everything in the denominations requested by the customers.
Important to know: As a wholesaler, we are very high on the manufacturers' priority list: This means that we get physical precious metals with a higher priority than is the case with smaller suppliers.
Precious metal prices have risen sharply since the beginning of the year. The refinery Heraeus published an assessment earlier this year with a gold price forecast for the end of 2022 of up to 2,120 US dollars. Do you think this price is still realistic given the situation in Ukraine, or could the price be much higher at the end of the year?
Of course, Heraeus is one of the big market makers. Heraeus has many years of experience and expertise. I know the people who make the forecasts very, very well. I value their opinion very much and at the same time, I know that Heraeus always has a very conservative opinion.
This range, which Heraeus published earlier this year, I would say is the inner range of the price of gold. Which prices we will ultimately see this year will certainly also be massively determined by the Ukraine crisis. If everything were to normalize bit by bit, the price of gold could stabilize at a level that Heraeus had forecast. Absolutely.
In the medium and long term, the economic effects of this crisis will affect the price of precious metals. In addition, there are the economic effects of the corona pandemic and increasing inflation.
I think in the long term the prices will certainly continue to rise. At the same time, the fluctuation will be extremely high in the coming weeks and months. But the long-term trend is clear.
As an Auvesta customer, you point out that you should not react in a panic right now. What would you recommend to an investor who is currently considering buying gold?
I read something this morning. It was said that there is a Chinese proverb: "The best time to plant a tree was 20 years ago - or now."
I think that's true of many investors who, like most of us, are trying to save for the future.
The precious metal is an indispensable part of financial planning. For financial security and wealth accumulation.
Anyone who has not yet dealt with the topic of buying precious metals should really look into it.
Our recommendation is still:
Do not act in panic, but think and invest long-term and strategically, and gradually build precious metal assets.
80% of our customers invest in the long term. We recommend every customer invest in precious metals on a monthly basis. This allows you to build up precious metal assets monthly with the cost-average effect.
It is a good time to start now, because there are still many risks ahead in terms of economic development in Germany, in the EU, and around the world.
As private investors, we don't have that many options. We are not banks, we are not the European Central Bank. We have to use easy opportunities. And the precious metals, especially gold and silver, are an important component.
Mr. Wang, thank you very much for the interview, and all the best!
