As the world continues to grapple with a global economic slowdown, precious metals are increasingly sought after by investors. The appeal of these safe haven assets is due to their unique combination of monetary value and industrial utility, as well as their ability to diversify portfolios in volatile market conditions. But with so many different ways to invest in these commodities, it can be difficult to keep up with the latest trends and opportunities.
Gold remains one of the most popular tradable assets on the planet, and its accessibility in multiple forms makes it an ideal investment for individuals across the globe. From physical bullion to exchange-traded funds and futures contracts, to mining company stocks and precious metals ETFs, the industry has something for everyone. Moreover, gold is also highly liquid and accessible, making it an attractive asset during times of economic uncertainty.
The demand for precious metals is primarily driven by Asian consumers, with China and India accounting for 58% of the global market share in 2022. These countries have a strong cultural affinity for the precious metal, and frequently use it in religious rites and rituals. The US is also a major market, with the country’s robust financial infrastructure serving as a hub for investment and trading.
The volatility of the economy and rising concerns over currency stability have led to a surge in interest in gold among individual investors. However, some analysts argue that the recent rally in the price of gold is unlikely to sustain itself in the long run. This is largely because Gen Z consumers, which account for 30% of the consumer base, are less interested in purchasing gold jewelry than their parents, and have a higher priority on environmental issues and social justice, such as those championed by 16-year-old Greta Thunberg of Sweden.
Gold dealers have been urged by the European Parliament and Interpol to implement robust anti-money laundering (AML) screening measures as the precious metals industry is highly vulnerable to criminal activities. The cash-oriented nature of the industry means that it is easy for criminals to conceal their illegal earnings, and as a result, dealers must conduct rigorous KYC checks on all customers and make sure they have adequate proof of identity. Failure to do so could lead to fines or even criminal conviction. The AML threat is exacerbated by the fact that many countries and dealers don’t have effective systems in place to identify suspicious transactions. The industry is often characterized by an opaque corporate structure, frequent changes in business relationships and frequent physical alteration of the gold to disguise its origins. Additionally, the AML landscape is complicated by the fact that many dealers operate on a ‘buy-sell-back’ model and may not report all sales to the relevant authorities.