Gold demand soars amid global turmoil
A new way to invest in gold is gaining traction with savvy Kiwis.
Tony Coleman has long warned that global financial markets are built on shaky ground. Recently, many more people are listening.
Coleman is the founder and managing director of New Zealand Gold Merchants and has been preaching the gospel of gold as a wealth protection tool for decades. His predictions about the fading state of the world economy have largely come to be, and with rising global uncertainty, the price of gold is reaching record levels as huge tides of investors round the world flee conventional investments for the safety of bullion. What's different this time is that even traditional havens like the US dollar and Treasuries are being dumped.
That's why Coleman reluctantly believes the price of gold will hit US$4000 an ounce next year, as predicted by an analyst cited in a recent Bloomberg report. That is a 25% increase from now – and over the past 20 years, gold's price in NZD has risen by 798%, including a 38% increase during the last year.
He believes the trade war, the Trump administration's shaky economic practices, Russia's invasion of Ukraine and China's response to all of the above has created thin ice financially for investors – and it's not getting any thicker. They are losing faith fast in the US dollar and even US Treasury bonds, which have traditionally been a haven during times of trouble.
Encouraging more people to get into gold as a safeguard, New Zealand Gold Merchants has introduced a new Goldsaver scheme with a $50 per month minimum outlay. Its model is similar to KiwiSaver: regular, small amounts going into a large pool – but only in gold, silver, or a mix of both.
'Unfortunately, I do not see things getting better. So, yes, I think the price of gold may well hit US$4000 an ounce next year. As a company, we are very busy; a lot of Kiwis are now cashing up their gold investment to take advantage of the price rises.'
Coleman metaphorically shakes his head at this. He understands why people might realise profits but says gold's value is primarily as a hedge against the sort of ructions affecting the world right now.
'That's what Goldsaver is about,' he says. 'We wanted to educate people that gold is something you should not sell very often – because it is or should be part of your wealth holdings, long term. In times of trouble, when currencies and bonds are falling, it is wealth protection and about 15-20% of your total portfolio should be in gold.
'We also want to introduce gold to people who haven't had an interest in it previously – and to see how they can benefit. It's a low-risk, small-amounts scheme where all investments are mirrored in actual, physical gold – the only one of its kind that does.'
Coleman believes GoldSaver is also a smart way to build a financial legacy for children or grandchildren, offering a tangible and historically reliable store of wealth.
Clients sign up with a quick ID check and set up automatic payments, then manage their portfolio through a personalised dashboard. They can view holdings, skip payments, adjust contributions, or switch between gold, silver, or a mix of both with just a few clicks.
Coleman is enthusiastic not just about helping smaller investors benefit as the wealthy have, but also about the scheme's rapid growth in just a few weeks. 'We have over 700 clients already and my goal is 40,000 – though 10,000 in the next 2-3 years.'
His diagnosis of a world mired in financial uncertainty, trade wars and military conflicts doesn't make for cheery reading – but it does underline the case for gold. 'What we are seeing now is worrying. I think Europe will be drawn into the war in Ukraine, which could well be accelerated.
'The Trump administration has some highly flawed economic theories and this trade war is driving up interest rates and will, in my opinion, not do the US any good. It means investors round the world are seeing the US dollar and US Treasury bonds falling – and they are getting into gold big time.
'This isn't just a trend; it's happening at unprecedented levels. It has also long been mooted that China could devalue the US dollar simply because of the huge amount of US currency and bonds it possesses.'
Coleman isn't predicting that will happen but says the world's financial system is 'sadly broken' and hasn't experienced a true financial collapse in nearly 40 years – not because the risks aren't there, but because US authorities keep intervening. 'We haven't had a financial crash really since 1987 and that's because every time there is a risk of it, the US Federal Reserve pumps more money into the system to stop it happening. But the over-indebtedness across the world will not be fixed by increasing indebtedness.'
In this environment, GoldSaver clients benefit in three key ways, he says. 'First, they are saving in the ultimate currency of our generation – gold. Second, it doesn't matter whether the price of gold goes up or down in the short term – the long-term average tells us all we need to know. Third, clients have an asset which will go up just enough to stop people selling on a whim and maintaining that level of wealth protection.'
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