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What is driving the domestic demand for gold? The Scoin Shop’s Rael Demby gives insight!

Consumer price inflation has been on an upward trajectory in South Africa, coming in at 5% year-on-year in September – the second-highest level since November 2018. In the US, the inflationary picture looks worse.

Global price increases are driven by supply chain bottlenecks (where components for manufactured goods sit on ships in overcrowded docks), increasing base metal prices and runaway crude oil prices (the latter being accelerated by a dearth of new oil supply coming onstream). Against this backdrop, together with a decline in the price of gold during August this year, demand for gold bars and coins skyrocketed.

Investors in physical gold (not through exchange-traded funds) rose 18% year-on-year during the three months ending 30 September, according to the World Gold Council. Investment in gold bars and coins jumped 262 tonnes during this quarter, according to the council.

“Fears of political instability and rising inflation are driving the domestic demand for gold bars and coins too,” says Rael Demby, CEO of Scoin Shop and the SA Gold Coin Exchange (SAGCE). Other dynamics are also at play in the SA market for physical gold. Local economic issues, such as the rut in the non-mining sectors and increasing unemployment, drives higher selling of existing bullion from customers, explains Demby.

“Most owners of gold coins don’t have a choice whether they’d like to sell their bullion,”
says Demby. “Actually, they don’t want to sell their gold, but to survive they must sell.”
Since 1999, Scoin Shop has served its customers through allowing them to buy physical
gold coins and sell them when needed.

“My father, who founded the company, believed that every South African should have
the ability to buy and sell physical gold,” says Demby. “We also believe that physical one-on-one interaction with our customers are crucial in building a thriving physical market for gold coins.”

Therefore, Scoin Shop has ten physical shops spread across Gauteng, Limpopo, the
Western Cape, KwaZulu-Natal and the Eastern Cape. The company also has a strong online presence which makes for seamless buying, selling, paying and delivery of gold. For customer reassurance about the safety of their bullion, Scoin Shop partnered with SafeGold for the safe storage of their gold. Scoin Shop sells a range of gold coins. These include the famous Krugerrands, in denominations of one-tenth ounce, one-quarter ounce, half ounce and one ounce.

The company also partnered with gold mints across the world, including The British
Royal Mint, The Perth Mint Australia, The Royal Canadian Mint, Monnaie de Paris, Staatliche Munze Berlin, the East India Company and the Royal Norwegian Mint. These mints produce collectible gold and silver coins similar to SA’s Rand Refinery (which mints the Krugerrands).

In a first for South Africa, Scoin Shop partnered with the goldtech company Troygold to allow customers to monetise their bullion holdings. Thus, Scoin Shop truly makes it accessible for South Africans to buy, sell and hold physical gold in a transparent, monetisable and digital way. “Every South African should truly have the ability to buy and sell physical gold,” says Demby. “Especially amid rising global inflation.”