Surge in demand for gold as Poles seek stable investment during troubled times

A 500-gram bar of gold is seen in Warsaw, Poland. Russia's war against Ukraine has led many people in Poland to invest in gold

In Poland, the allure of gold has surged amid global crises.

As COVID-19 struck, Poles queued up for precious metals, a trend that intensified with Russia's invasion of Ukraine on February 24, 2022. Piotr Kozik, who manages a Warsaw shop selling gold, recalls the unusual sight: "On that day there were longer lines for gold at our store than for donuts at the bakery," he remarked.

The conflict next door has driven Poles to seek refuge in gold's perceived stability. Now, as the war enters its third year, the queues may have dispersed, but the appetite for gold persists. Radoslaw Paklikowski, a Wroclaw-based entrepreneur, started accumulating gold and silver in 2021, dedicating 5% of his assets to these metals.

He believes in the tangible security gold offers: "Having real physical gold is important and by that I don't mean a ton of gold, but an amount that will help you cross the border or make your family safe if anything will happen," he said. Membership in NATO provides a sense of security for some, but there's a growing concern among those once under Moscow's control that if Russia triumphs in Ukraine, it won't stop there.

While governments are bolstering their defences and supplying weapons to Ukraine, ordinary people are seeking their own forms of protection. Those with the means have been purchasing properties in Spain and Italy.

Unlike investments in real estate or artwork in Poland, gold, diamonds, and silver can be easily transported. In Poland, the allure of gold is deeply connected with the lasting trauma of World War II, when possessing it could mean the difference between life and death.

Family tales still circulate about relatives who survived thanks to gold jewellery or coins, which enabled them to buy food or cross borders to safety during the German and Soviet occupation. Nearly 6 million Polish citizens, including most of Poland's Jews, were killed in that war.

Marta Bassani-Prusik, head of precious metals trade at the Mint of Poland, revealed that her clients include Poles who remember such family histories, as well as individuals with Polish roots who return to visit the land of their ancestors, some of whom escaped the Warsaw Ghetto.

"They say that they are alive only because of the gold, because their grandparents had a gold bar or a gold coin," she shared. She noted that the market for investment gold bars and coins was sluggish in the years leading up to COVID-19, but surged with the onset of the pandemic and war "because everybody was afraid of what was happening."

The gold market, which seemed to be stabilising, has received a fresh impetus from post-pandemic inflation, with figures soaring over 18% in Poland. Gold's price can be as unpredictable as stocks, presenting the risk of loss for investors who buy at peak prices and sell when values dip.

Additionally, the threat of theft or misplacement looms, and since gold is dollar-priced on the international stage, akin to oil, currency shifts compound the gamble for some investors. That it remains attractive attests to its universal allure, and gold has surged from around $1,300 per Troy ounce — which is 31 grams and the standard for measuring precious metals — to over $2,300 over the past decade.

This uptrend is increasingly fuelled by demand from private buyers and central banks in Asia, says Michal Teklinski, an authority at Goldsaver, a burgeoning division of the investment gold firm Goldenmark Group that offers customers the option to purchase tangible gold in instalments.

Teklinski forecasts a continued ascent in gold prices in the forthcoming years, citing the growing gold reserves of central banks in China and various developing nations. In the midst of this worldwide surge, Poland's physical gold market has emerged as one of Europe's most robust after 2020, trailing only behind Germany, Switzerland, and Austria.

This vigour is propelled by increasing affluence and a scepticism towards officialdom. "After 2020, people started to go back to their roots," Teklinski observes. The Mint of Poland, a company with roots dating back to 1766 and was once state-owned before being privatised following the fall of communism, is now a listed entity on the Warsaw Stock Exchange.

Today, it exclusively holds the rights to mint circulation coins for Poland, alongside producing coins for nations across the globe, from Paraguay to Ireland and Luxembourg to Thailand. The firm pledges that its gold is ethically sourced and produced at Polish mines, ensuring adherence to human rights and environmental protection standards.

Downtown Warsaw, the location of the Mint of Poland shop, showcases real-time gold price updates on a display screen amidst a backdrop of towering skyscrapers built on what once was the Warsaw Ghetto. Marcin Grzesiak, an entrepreneur in his 40s, recently visited the shop, purchased three gold coins, and parted with 29,000 Polish zlotys ($7,000) in cash which he then pocketed.

Grzesiak hailing from eastern Poland near the Belarus border, expresses a growing concern about the geopolitical scene and potential impact of cyber threats on global financial stability prompting him to diversify his investments. "We are living in turbulent times," he conveyed. "I didn't expect Russia to attack Ukraine. Even my friends from Ukraine didn't expect Russia would attack them. Anything can happen."