‘They want a piece of that pie’: Gold FOMO untarnished by price meltdown

9 hours ago 4

A dramatic plunge in the gold price has not dampened the red-hot demand from retail investors looking to pile into the precious metal, with punters lining up for hours to buy gold nuggets.

Gold prices, which have climbed 60 per cent over the past year, hit a record high of $US4381 per ounce earlier this week before diving more than 5 per cent on Tuesday night to settle around $US4146.70.

Jwalit Nayak, Pranjali Nayak and son Dhanay queue outside the ABC Bullion store in Martin Place to collect their gold.

But in Sydney, despite 36-degree heat, swarming flies and long lines, Jwalit Nayak and his wife Pranjali Nayak queued for over an hour at Sydney’s biggest gold dealer to pick up their 24-carat gold biscuit.

“It’s an asset which is not depreciating. You always get good value. In times of crisis, you can sell gold and actually get some money,” Jwalit said.

The recent gold surge has also coincided with Diwali, the five-day Hindu festival of lights, which began on Tuesday this year. Diwali is traditionally considered an auspicious time to purchase gold to invite wealth and good fortune.

The Nayaks joined the queue at ABC Bullion in Martin Place at 2pm to collect their 2.5 gram 24-carat gold biscuit, for which they had prepaid $598.

But after seeing the price fall overnight and witnessing the recent boom, they were hoping to purchase another 2.5 grams.

“[The price has] gone down, so we’re contemplating adding a little bit more,” said Pranjali.

“We don’t want to sell it. It’s just for the investment,” said Jwalit. The couple, toting their two-year-old son Dhanay, have been investing $1000 to $1500 in gold every year since 2019.

“If you’re getting married, the father or mother gives gold to their kids as a blessing. Since we have a kid now, we’re trying to invest a bit, little by little.”

ABC Bullion security guard Douglas Snoodijk has been managing long queues – which sometimes wrap around the block – for the last three weeks.

“This is a quiet day,” he said of the queue on Wednesday afternoon, where he counted about 70 people. Snoodijk normally cuts the line off by 3:30pm to avoid disappointing people, some who can become combative.

ABC Bullion security guard Douglas Snoodijk says people have been queueing for three weeks.

“They’re frustrated by the lines, by having to wait,” he said.

“Some are just wanting to get in because they’ve seen everything grow. Silver’s gone crazy, gold had gone crazy last week. So [it’s] FOMO, they want a piece of that pie,” Snoodijk said.

AMP deputy chief economist Diana Mousina agreed the recent rally has been driven by retail demand, but pointed out demand for gold had grown over the past five years due to political uncertainty.

“Since 2020, we have actually seen quite a large increase in the pace of central bank purchases of gold,” Mousina said.

Central banks hold gold as another type of reserve, alongside currency.

Although gold prices look overvalued to Mousina, she believes geopolitical risks would still mean there was “upside” for the gold price over the next 12 months.

Hugh Dive, chief investment officer at Atlas Funds Management, said the queue of people looking to buy gold was reminiscent of the booming demand for surging technology stocks at the time of the dotcom boom of the late 1990s and 2000.

That bubble ultimately burst in the early 2000s when tech shares imploded in the early 2000s.

Despite the booming demand for gold from retail investors, Dive warned the price of the commodity was volatile, and said it was harder to value than other metals or assets. Dive’s fund had not invested in gold mining shares, and gold miners were in many cases ploughing their profits into increasing production, which would eventually mean more supply of the metal, he said.

“It’s retail investors piling in towards the end,” said Dive. “I could be wrong, it could keep going up, but it has the feeling of the dotcom boom.

“There’s a supply response coming through.”

The chief investment officer believes the plunge in gold stocks on Wednesday was driven by people taking profits on investments after the rapid price rises.

“People are taking profits and buying can evaporate. But looking outside my window, people are still standing in line.”

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