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The Pandemic Rises Gold Sales High to Make Ends Meet!

Rises Gold Sales High

The Pandemic Rises Gold Sales High to Make Ends Meet!

  • 23 Jul 2021
  • Posted By Cash For Gold

Rises Gold Sales High to Make Ends Meet!: The Pandemic Impact on Gold

Paul Fernandes, a 50-year-old waiter, last year took out a loan using his gold as collateral to pay for his children’s education after losing his job on a cruise liner, he told FeedSpot. This year, he is selling his gold jewelry to meet his expenses, after failed attempts at starting a home business and finding another job.  “A gold loan is, after all, a debt that I am taking on,” he said from his hometown. “Selling my jewelry means I am not obligated to pay someone back along with an additional interest on that.”

With the pandemic pushing millions into poverty or bankruptcy, many ex-employees are now also turning to their last resort- getting to know how to sell gold coins for cash to make ends meet. In rural areas of countries, for example, the biggest bullion buyer, a brutal new wave of the virus has had a catastrophic impact on the economy and incomes. With fewer banks around, people in rural areas are now relying on gold in times of need, as it can be easily liquidated for funds.

The likelihood of financial distress caused by the second wave is much higher and it could lead to more outright sales of gold, unlike in 2020, when consumers chose to take out loans against their stash of the metal, according to Chirag Sheth, a consultant at London-based Metals Focus Ltd.

Gross scrap supplies, including old gold, melted to make new designs, may exceed 215 tons and surge to the highest in 9 years if a new wave emerges, he said. For a nation that imports almost all its gold mainly from Switzerland, a higher local supply will also limit overseas inflows.

“You already had a financial problem last year and you got out of that problem through gold loans. Now again, you are having financial problems this year with a potential third wave on the way, which can again mean lockdowns and job losses,” said Sheth. We can expect distress sales in a big way in August and September when the third wave could actually set in.

Many had clawed their way out of poverty face grim job prospects, as lockdowns crippled the economy. More than 200 million have even gone back to earning less than minimum wage, or $5, a day.

Many countries have been cutting down on their gold purchases in the past couple of years as a weak economy, and the virus outbreak trims their spending power. In 2020, gold sales fell to the lowest in more than two decades, according to the World Gold Council.

Still, demand may rebound this year, rising as much as 40% from a year ago, driven by a fall in prices and about 50 tons of latent wedding purchases being pushed to this year from 2020, according to Metals Focus Sheth.
“The third wave remains the biggest risk to our estimate,” he said.

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