International Centre for Policy Studies
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March 11, 2013

Keeping savings in gold is not useful to Ukrainians

Over the last year, demand for gold has fallen off across the world and its price has remained flat. The biggest gold holders have begun to reduce their reserves. Economists say this is due to the low level of inflation and gradual stabilization on financial markets, reports Obozrevatel. ICPS analyst Oleksandr Zholud discussed whether, given this situation, it makes sense for ordinary Ukrainians to keep their savings partly in gold.

Mr. Zholud tied the issue of the price of gold to the price of metals, saying that the price of gold in Ukraine, which depends on prices on international markets, could change if additional taxes are imposed on precious metals.

"Demand for gold is affected by investor fears regarding the future of the Euro and dollar," says Oleksandr Zholud. "Right now, inflationary expectations are low on the euro and dollar markets. So I would say that it's unlikely that the price of gold will rise, although it might fluctuate up to 15% if prospects for the future remain uncertain."

Since gold is currently showing no signs of growing in price, the ICPS analyst says that it is not really an investment tool for the average Ukrainian family.

"For most Ukrainian families, gold is not the main way to accumulate wealth, but it might suit some people," says Mr. Zholud. "Gold can, for instance, be held in the form of coins or ingots issued by the National Bank. But if you buy gold coins from the central bank, there is a very high commission charged, making their price higher than the real value of the gold in them, because the minting process itself costs a considerable amount. In short, it would be hard to say that this is a very convenient acquisition."