Gold Rush: Lithuanians rushed to lock in profits from rising metal prices, which could rise even further

April 2024 • 5 min

As gold prices soared to unprecedented heights in April, Lithuanian companies dealing in the precious metal, such as Florinus and Paysera, observed a divergence in investor behaviour. While some gold holders hastened to sell their holdings and secure profits, others opted to wait, anticipating a further surge in precious metal prices and increasing their investments in this asset class. Interestingly, there has been a notable rise in investor interest towards investment-grade silver, which serves as a complementary and diversifying addition to existing investment portfolios. This trend suggests that investors are seeking to expand their portfolios with alternative investment instruments. After retreating from its record high of USD 2,384.5 per ounce on 9 April, the gold price experienced a resurgence on Wednesday, reaching USD 2,330 per ounce as of today.

Florinus, which operates four precious metal investment stores in Lithuania, has seen an increased flow of visitors in recent months, driven by record investment gold prices.

"The unexpected and surprising reduction in FED interest rates, uncertainty in the stock markets, persistent inflation, recessions in major economies, and ongoing geopolitical conflicts – such as the wars in Ukraine and the Middle East – have collectively given a tremendous boost to the global gold market and prompted investors to turn to gold once again" – says Žilvinas Leškevičius, CEO of Florinus.

This is also reflected in the increased sales of investment gold in Lithuania over the past few months alone.

"In March, we purchased precious metals worth EUR 539,000 and sold them for an impressive EUR 2.3 million. By 24 April, despite gold prices surpassing all-time records, our sales of precious metals reached EUR 2.5 million, while our purchases amounted to only EUR 351,000. This increase in investment gold sales, coupled with lower purchases, suggests that investors are positioning themselves for a continued 'rally' in gold prices, while alternative investments appear less attractive" – says Ž. Leškevičius, adding that recent actions by China have further contributed to the growing demand for gold.

Ž. Leškevičius notes that the growing interest in gold automatically strengthens the silver market as well, since silver is also valued as a safe investment instrument and is often compared to gold.

Some sell, others hold or increase reserves

Active gold trading also took place among those who buy precious metals using technology. In March, Paysera purchased EUR 460,000 worth of gold from app users, compared to EUR 100,000 in April.

Kostas Noreika, a board member of Paysera, says that gold holders took advantage of the opportunity to profit from the commodity's price surge, but there are also those who expect a further rise in the gold price – the company's clients still hold around EUR 5.12 million in gold reserves.

"During inflation, people were looking for ways to protect their money from devaluation, and gold became one of the choices. Now, seeing those record prices, gold holders have realised their reserves and taken profits. However, others remain steadfast, anticipating further appreciation in gold's value and actively accumulating gold reserves" – says K. Noreika.

According to Paysera, buyers purchased gold worth EUR 153,000 via the app in less than a month during April. K. Noreika says that the buyer base is highly differentiated.

"The buyer segmentation reflects the universality of gold as an investment, appealing to individuals from various demographics – from young technology enthusiasts purchasing gold through mobile apps to older generations who prefer personal consultations in gold stores" – says K. Noreika.

There is still room for further price growth

The price of gold retreated from its record high of USD 2,365 per ounce, but as of Wednesday morning, 24 April, it had increased by 2.4% to reach USD 2,330 per ounce according to data from Kitco.com.

The head of Florinus believes the current price level is still supported by forecasts of additional FED interest rate cuts in June or August of this year, although experts predict the probability of cuts to be 20% and 50% respectively.

"Currently, a reduction in interest rates by the European Central Bank is also expected, which would further enhance the appeal of gold for investors and potentially trigger another significant wave of price increases" – says Ž. Leškevičius.

He points to investor and analyst forecasts suggesting gold prices will end 2024 at around USD 2,500 per ounce, with the potential to reach as high as USD 3,000 per ounce at some point during the year.

According to data from Paysera, buyers have primarily been purchasing 1g and 2.5g gold bars, which cost EUR 88 and EUR 212 respectively as of Wednesday morning. The most popular coins have been the South African Krugerrand and Austrian Philharmonic, each priced at EUR 2,307 on Wednesday.

About Paysera

Founded in 2004 in Vilnius, Lithuania, Paysera is a financial technology company that offers more than 100 ways for European online stores to accept payments from buyers for their purchases. Paysera also provides services such as accounts, transfers, currency exchange, gold trading, and others.