Panic-buying of gold as Germany goes into coronavirus lockdown

Berlin Letter: ‘At times like this you need to diversify ... gold is always a safe investment’

People queue in front of the gold trading store, Degussa,  in Berlin, on Monday. Photograph: Annegret Hilse/Reuters

People queue in front of the gold trading store, Degussa, in Berlin, on Monday. Photograph: Annegret Hilse/Reuters

Your Web Browser may be out of date. If you are using Internet Explorer 9, 10 or 11 our Audio player will not work properly.
For a better experience use Google Chrome, Firefox or Microsoft Edge.

 

On a leafy side-street in western Berlin, the 26th person joins a queue outside the shop. It’s not a supermarket, nor is it a chemist. It’s a gold shop.

With the number of confirmed cases nearing 10,000, Germany is entering the second phase of a new coronavirus reality.

After a staggered start, Germany joined its mainland European neighbours in lockdown on Wednesday. The last 10 days have seen scenes here similar to elsewhere in Europe: cafes as empty as food shops are full; sold-out pasta, fights for toilet paper. But the sight of gold panic-buying in Berlin’s Fasanenstrasse is a new one.

“At times like this you need to diversify,” says a 30-something young man in designer sportswear, checking his smartphone nervously. Does he fear the euro is in danger of Corona? “I’m not sure. Gold is always a safe investment.”

The run on gold is not just a Berlin phenomenon. Ignoring social distancing health warnings, tightly-packed queues could be seen this week outside branches of gold trader Degussa, from Hanover to Frankfurt to Munich.

There are two types of gold customers waiting in the spring sunshine. The first have up to €10,000 they want to exchange anonymously for gold, fearing cash machines will soon stop working. They are in for a moderate bargain thanks to the second type of customer here: selling gold to cover dramatic falls in stock prices.

The gold sell-off on markets is reflected in trading prices: despite the growing pandemic panic, gold prices are down nearly 5 per cent in the last 30 days.

Looking ahead to the next 30 days, daily life in Germany is now closely regulated: minimum social contact, schools are shut and some state exams postponed. Only stores selling essential food and supplies are open, though Germany’s federal structure means all 16 state deviate slightly: playgrounds in Berlin and the western state of North Rhine-Westphalia are open but closed elsewhere.

Free beer

Restaurants in Schleswig-Holstein, on the Danish border, have closed entirely while restaurants in other states have limited opening hours.

In Hamburg the legendary all-night Elbschlosskeller pub has closed for the first time since it opened its doors in 1950. As the original key was missing due to seven decades of neglect, the owner had to get a new lock fitted.

Down south, a dream came true for some Munich residents: treated to free beer from a local bar owner who sells non-pasteurised beer that keeps a maximum of two weeks.

“We’re closing and thought, ‘why not give it away instead?’, all 2,000 litres,” said Florian Schonhöffer. “Of course it’s a catastrophe but this affects all of us.”

With retail in suspended animation, Germany’s car industry is to follow this week with VW, BMW and Daimler all shuttering their production plants. New border checks in Poland have lead to lorry tailbacks of up to 60km in Saxony.

Restrictions on trading and movement, in place until Easter at least, means Europe’s largest economy is racing towards a recession cliff. Finance minister Olaf Scholz has announced emergency liquidity plans for businesses and loosened rules allowing companies retain companies with reduced payroll costs.

“We are also thinking of how, in addition, we can stimulate firms directly,” he told Die Zeit weekly, suggesting non-trading companies could apply for rent relief.

Chancellor Angela Merkel, facing criticism for her restrained response to the pandemic, will use a broadcast to the nation on Wednesday evening to urge citizens follow emergency measures.

Infection specialists at Germany’s Robert Koch Institute (RKI) have warned of “exponential growth” of the virus in the coming days.

“We are at the start of an epidemic,” said Lothar Wieler, RKI president. “If we don’t manage to implement the measures it’s possible that in Germany, in two to three months, we’ll have up to 10 million infection people.”

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.